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Samsung eating Apple’s Profit pie even as the industry gets hammered

Posted in Device Platforms, Mobile Devices and Company Updates by Manas Ganguly on August 5, 2013

Canaccord genuity in its Q2, 2013 Smartphone value share reinforces the change in guard in the smartphone segment. Samsung seems to be riding on its multi-product Android portfolio to fork into Apple’s pie.

chart-of-the-day-oem-profits

Apple has 53% of industry profits (as against 71% last year) and Samsung has 50% (was 37% last year). Samsung keeps gaining quarter on quarter and Apple keeps loosing. While Samsung and Apple generated $5.2 billion and $4.6 billion, respectively, in handset profits in the second quarter, according to research firm Strategy Analytics. By comparison, the mobile division of LG Electronics Inc., the No. 3 smartphone maker, had a $54 million operating profit with a 5.3% share in the latest quarter.The duopoly stands in stark contrast to the long list of companies jostling to establish themselves as a formidable player, including Nokia Corp., BlackBerry Ltd., Sony and LG. Even fast-growing Chinese manufacturers such as Lenovo Group Ltd., ZTE Corp. and Huawei Technologies Co.—all major brands in the burgeoning Chinese market—have yet to prove that they can deliver consistent profits in smartphones.

Will a combination of iPhone 5S + iPhone 5C (Low end Apple iphone) be able to turn it around for Apple? Samsung currently seems to have awesome momentum and might end of taking the No.1 position in Smartphone profits by Q4, 2013.

What doesnot change is that the rest are truely “laid to rest”. From a consumer perspective, this duopoly can be damaging in terms of choices. Device Makers may start throwing in the towel – What with no profits and cash burns. NEC Japan is quitting business.
HTC has reported a 83% drop in profits.

Apple & Samsung monopolize smartphone profits (Even as Apple pulverizes Samsung)

Posted in Industry updates by Manas Ganguly on August 8, 2012

Samsung shipped about 50 million smartphones last quarter — about double the number Apple sold and, according to IDC, the largest number of units ever shipped by a handset vendor in a single quarter. However, if Raymond James data is any indicator, Samsung’s 2:1 lead over Apple is a statistic in vain. Apple — thanks to the higher gross margins of the iPhone and iPad — far outshines its rivals in both revenue and operating profits.

Having generated only about 6 percent of the industry’s smartphones and tablets in the second quarter, Apple captured about 43 percent of the industry’s revenue and an astonishing 77 percent of the industry’s operating profits. Thats about 2.65 times that of Samsung’s. Interestingly enough, Apple and Samsung account for 96% of the global Mobile computings EBITs. Now you know why the rest of them are such a deep shade of Red! Apple’s statistic is of note especially in the light of the fact that Q2 in generally Apple’s weakest quarter and Samsung had the Galaxy SIII launch in Q2.

Ultimately, profits are the feedstock of innovation; and, innovation drives profit. Until Samsung starts generating more profits than Apple, we would not be overly concerned with who has the unit share lead. Remember, HP and Dell still sell a lot more PCs than Apple sells Macs, but does it matter. Probably not to Apple.

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