The Korean manufacturer’s supremacy in the smartphone business is now entrenched, while the demand it’s seeing in other lines provides a timely reminder of a wider shift from the desktop to mobile.

Samsung's Galaxy Note II

If there were any doubts about Samsung maintaining its world’s-top-phone-manufacturer status for the short to medium-term future, they should be dispelled as of now. The Korean company’s results for the fourth quarter of 2012 show profits up a whopping 76 percent since Q4 2011, reaching 7.04 trillion won ($6.55 billion).

Much of that is down to Samsung’s two Android flagships, the Galaxy S III and Note II. Samsung’s Mobile Communications division brought in revenues of 27.23 trillion won ($25.35 billion) during the quarter, which represents just under half of the overall company’s revenues in that period – remember that Samsung also makes everything from semiconductors to refrigerators.

Smartphone supremacy

“Samsung led gains with its full lineup of entry- to mid-level smartphones, expanded sales of tablet PCs and an increase in average selling price (ASP) from the previous quarter,” the firm said in its results statement. “The success was mainly brought on by strong sales of Galaxy S III and Galaxy Note II, which beat the popularity of their predecessors with record sales in record time.”

Samsung doesn’t break out actual mobile phone shipment volumes in its financial reports, but analyst house IDC estimates shipments of 63.7 million smartphones during the quarter. That’s up against Apple’s 47.8 million iPhone shipments during the same period. During the fourth quarter of 2011, Apple sold 37 million smartphones and Samsung sold 36.2 million. At the time the two companies were battling it out for the top spot, as Samsung had been ahead in the previous quarter, while people were waiting for the iPhone 4S.

Those days are over: the fourth quarter is what really counts, due to iPhone launch timing and the holiday season, and Samsung is now clearly way ahead of its U.S. rival in terms of shipments, with 29 percent market share to Apple’s 21.8 percent. There’s a big drop to the third-place company’s share – Huawei can boast 4.9 percent of the smartphone market right now, at least in terms of shipments. (Sony’s next, followed by ZTE, and Nokia is now jumbled into the “others” category.)

Obviously Apple is more profitable, having made $13.3 billion in profits during the quarter, which is roughly twice as much as Samsung did across its whole business. That said, Samsung’s average smartphone selling price is rising, as its big hitters are premium devices.

PC decline

Other elements of Samsung’s results also provide useful indicators for various tech sectors. One relates to the company’s DRAM business. It should come as no surprise that Samsung sees “weak” demand for its PC DRAM – the desktop PC business as a whole is in inexorable decline as the world goes mobile, and we saw further evidence just days ago when Intel pulled out of the motherboard business. Samsung’s mobile DRAM business is steady, and the company expects that and its server DRAM line will do well this year.

In a similar vein, Samsung’s notebook and monitor display panel business is also feeling the pain, while OLED panels for smartphones are keeping profits up.

And where’s the biggest growth in mobile? Emerging markets, of course – in fact, Samsung expects demand for smartphones in developed countries to “decelerate” during the first quarter of 2013, while more affordable smartphones and “a bigger appetite for tablet PCs” stimulate demand in emerging markets through the whole year.

With a company that has as diverse a portfolio as Samsung’s, results such as these really do provide a wide-angle snapshot of the times we live in. And, tech landscape aside, that also includes uncertainty: Samsung said it’s probably keeping capital expenditure steady for 2013 rather than increasing investment, but it will “respond to the market’s ebb and flow with a capex plan that is flexible in manner”.

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  1. I wonder if there will be a climate related slow-down. All the phone shops are empty of customers, those that are there are trying to sort identity theft scams.

  2. Lead over Apple? In marketshare maybe, but not in profits.

    1. Exactly!!!

      Ask Samsung if they would be happier selling more phones than Apple, or if they would be happier selling less phones than Apple but have Apple’s 80% of the profits of worldwide mobile phone sales.

      Hmmm, I wonder what their answer would be? ;-)

      1. Sounds good until people begin to realise that they are being ripped off by being overcharged for an inferior product

  3. Seriously giga on? Have you actually looked at the actual metics and numbers. First off in the one true metric that matters apple blew Samsung out of the water: profits. Plus samsungs profits derive from all of its business lines not just its electronics business. You are mostly comparing apples with Oranges. Pun intended. If you looked at just its electronics business vs apple the outlook is even more dismal

    Secondly Samsung only reports shipped numbers. That’s not the same as actual sales.

    Instead of following the herd mentality dig a little deeper. See for example:


    1. I was clear in the piece that Apple is more profitable. This article is about phones in hands. It would be a mistake to *only* focus on units – think back to when Nokia was still technically a leader but clearly on the way down – but it’s not a metric you can ignore. Ultimately, it will be a case of ‘which brand do you most see on the street’, and that is hugely important.

      1. Very true.

        People tend to forget that a giant on its way down is still a giant by virtue of its sheer size.

        Profits, while hugely important, are an indicator of the immediate past success and not necessarily an indicator of future momentum.


      3. Comparing unit sales of smartphones between Apple and Samsung is like comparing apples to oranges. 2/3rds of Samsung’s smartphone sales are low end devices with an ASP of ~$300. Only about 20 million of Samsung’s Christmas quarter smartphone sales were high end devices like the Galaxy SIII and Galaxy Note. So, apples to apples, Apple blew Samsung away, selling 2.5x as many high end (read: profitable) phones.

        The bulk of Samsung’s unit sales are very vulnerable to poaching by Chinese name brands and no name OEM’s. Aall these low end phones run Gingerbread Android, so they are effectively interchangeable. There is no customer stickiness because the consumer cost to switch is zero. Apple is much less vulnerable to attack from the low end of the market becuase it has a very loyal customer base, plus a unique and highly sticky software ecosystem.

    2. I believe the numbers are, indeed, based upon Samsung Electronics results, not the much larger Samsung Group, so it is a little more Apples to apples than you suggest.

      Market share is also as important as profits in many cases, as it can indicate future strength in the marketplace. Apple has built an incredible high margin business in the CE space, but their growth trajectory is in question, as evidenced by the recent stock trend.

      Nonetheless, it’s great for consumers to have two strong competitors going at it!

  4. What you are seeing here is a top for Apple or a change in momentum. Yes they are more profitable than Samsung but why? Is it because they are spent so little on R&D to make a better phone? Samsung has been pushing the envelope with the Note while Apple’s Iphone 5 is a minor upgrade in hardware from the 4s and little if no improvement in the UI.
    To my perspective Apple has been coasting on the success of iphone and has coasted for too long. MS did the same thing with IE6 which was the standard on the Internet prior to Firefox. MS did nothing with it (how long was it before we had IE7? which was a dog)and Firefox soon ate their lunch.
    Can Apple fix it? It looks like they are trying. They canned Forstall and moved Ives in. Hopefully will see a battle royale where consumers get kick ___ phones

    1. Apple’s seems to be a classic case of the Innovator’s Dilemna (http://en.wikipedia.org/wiki/The_Innovator's_Dilemma):

      > successful companies can put too much emphasis on customers’ current needs, and fail
      > to adopt new technology or business models that will meet customers’ unstated or future
      > needs

      It seems consumers want bigger phones, smaller tablets, higher-density displays (and possibly a stylus?) and all that at a lower price point. Apple only grudgingly, and marginally, increased the the iPhone 5 screen size and even more grudgingly released the iPad Mini.

      Samsung did all of the above and that is part of the reason they have the wind behind their backs.

      1. Samsung did because they have to try every trucks to look for success and not because they know what consumers want.
        If they knew they would have make just one products and not 37 iterations at different price point.
        Your theory of profits is BS and name me one company that keeps on losing money and yet deemed successful and able to stay in business.

        One more thing for a company to survive they have to be continuously profitable.

        But then your theory suits one company Amazon which makes less yet deem to be better than more profitable companies.

  5. you guys did not read the full article, he says apple is more profitable.

  6. Samsung would reasonably be ahead in smartphone devices sold – they make a million and one models in low, mid, and top end categories. Apple has one flagship smartphone, and it’s a top end model, which typically sell as well as cheaper models.

    The Fact that Apple is still sitting where it’s at is remarkable, but apparently so called factual journalists lump everything together to prove their own point rather than examine the specific numbers.

    1. I would actually dispute that analysis. Apple continues to sell older versions of the iPhone and cuts their pricing as newer models emerge. That makes those older models a rough equivalent to Samsung’s S III Mini and that kind of phone. Not exactly the same thing, I’ll grant you, but Apple certainly sells more than one phone.

      1. Can you explain your analysis when BOTH Verizon and AT&T reported that the majority of the their smart phone sales where iPhone? Can you explain why iOS leads Android by ever web/internet analytics measure? I mean by your numbers Android should be killing iOS. Can you explain why, since this past week, I have made it a mission to look around at what people are using and I find a vast majority on iPhone?

  7. And samsung ships a bazillion different phones, many of which are available for no money down. Noticed I said shipped. Samsung never reports sales. Apple does. Again you are comparing apples with oranges and greatly oversimplifying things.

    1. Give it up. He won’t respond to that FACT.

  8. Moreover what matters more? how many units shipped or profits? I bet you Samsung would rather have apple’s profits than having shipped more phones. Again shipped, not sold.

    If Samsung was selling all those phones it claims to have shipped, its profits should be way way higher….

    Again dig deeper and examine the specifics

  9. Once again Apple is doomed. They just reported one of the most profitable quarters in the history of the planet. How can they sustain this. It must be a peak and that means the trend is DOWN.

    More eyeballs on stories that predict failure for Apple.
    Nothing to see here move on.

  10. David Beckemeyer Friday, January 25, 2013

    What an incredible low for gigaom. Linkbait at its finest. Apple reports record profits, large increases in market share, dominating ALL other phones in the U.S. (including Samsung). To say nothing of the yet untapped upside in tablets. Yeah, time to put them on the Deathwatch.

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