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Smartphone wars: Samsung top dog...for now

By | October 28, 2011, 6:23am PDT

Summary: Samsung should celebrate being the king of smartphones today, but the fourth quarter competition is going to be far more challenging.

Credit: Strategy Analytics

Credit: Strategy Analytics

Samsung led the smartphone pack in the third quarter, but it’s uncertain how long the Korean electronics giant can stay top dog.

According to Strategy Analytics, global smartphone shipments hit 117 million units in the third quarter, up 44 percent from a year ago. Samsung shipped 28 million smartphones and trumped Apple with 24 percent market share. The news has techies all abuzz.

On its earnings conference call, Samsung said its new Galaxy devices as well as Long-Term Evolution phones drove its results.

Morgan Stanley analyst Keon Hon noted that Samsung’s phone performance was impressive. Hon said in a research note:

Handset volume was much stronger than anticipated at 91 million to 92 million vs. 88.5 million expected. We think about 29 million of that was smartphones (up nearly 45% quarter over quarter in terms of volume) which drove up the blended average selling prices and margins again on better mix. 4Q11 guidance was positive with expectations of further volume growth and mix improvement. More new products are being released both at high-end and mid-end.

All is well for Samsung right? Not so fast.

There are a few good reasons to take this Samsung rules smartphones line with a hefty grain of salt. For starters, Samsung benefited from Apple’s iPhone 4S launch. As noted on Apple’s latest earnings call, the company was looking to clear inventory ahead of the iPhone 4S. So far in the fourth quarter, iPhone 4S sales have been on a blistering pace. Some of those sales will come at the expense of Samsung devices.

In addition, Motorola and HTC have new Android devices hitting the market. In the U.S. Samsung won’t have the LTE market to itself.

Meanwhile, it’s also worth checking out IDC’s latest data. IDC noted that smartphone growth in the third quarter slowed as many folks waited for new phones. The overall mobile phone market slowed.

IDC noted that Nokia’s stemmed its market share slide due to a better feature phone lineup. Now Nokia is going to carpet bomb the globe with Windows Phone devices.

Add it up and Samsung should celebrate being the king of smartphones today, but the fourth quarter is going to be far more challenging.

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Topics

Phone, Smart Phone, Samsung Electronics Co. Ltd., Smartphone, Smart Phones, Cellular Phones, Handhelds, Consumer Electronics, Personal Technology, Hardware, Larry Dignan

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic.

Disclosure

Larry Dignan

Larry Dignan has nothing to disclose. He doesn’t hold investments in the technology companies he covers.

Biography

Larry Dignan

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CNET News.com. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism and the University of Delaware.

For daily updates, follow Larry on Twitter.

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Samsung has a diverified portfio of successful consumer products
Patanjali 20th Jan
@mmacwan83
They have the marketplace nouse to design for what consumers want and seem pragmatic enough to promote the devices for themselves and not some some company 'magic' or ecosystem. For consumers, this means being able to just make decisions about what is in front of you, rather than ethereal promises of what you might be able to do.
View in thread
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Any indication of how many are Bada?
Bruizer 28th Oct
Last quater, it was about 5,000,000 of the smartphones Samsung shipped were Bada with an estimated 12,000,000 slated for this quarter.
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Any indication of profits?
toddybottom 28th Oct
@Bruizer
Sales don't count if they don't bring you profit. Apple's sales bring Apple huge profits. Samsung's sales? I don't know. I would prefer to see a chart of profits. I bet Apple still wins on that metric and that metric is the only one that really counts.
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RE: Smartphone wars: Samsung top dog...for now
snoonw 28th Oct
@toddybottom
b4 all the fan boys would complain that its wasnt the os that mattered. and apple would sell more then any other company now they have moved to profit. iphone will have the same problem as blackberry by next yr. samsung up 44% iphone sales down 17%. and the galaxy nexus hasnt even been released yet.
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@snoonw
baggins_z 28th Oct
No, it's always been about profit, because if you aren't making money, you don't stay in business, no matter how many units you move. To pretend otherwise is to just be deliberately ignorant.
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RE: Smartphone wars: Samsung top dog...for now
anono Updated - 28th Oct
@toddybottom
Unless, you are a shareholder; profits are irrelevant.

Example, let's say Apple and Samsung sell approximately the same quality phone for $650.

Apple manages to produce it for $200 due to clever deals with suppliers, limiting models (which helps with suppliers and R&D). Samsung on the other hand produces it for $250.

Yes, Apple will make $450 and Samsung will make $400 so Samsung will make less, but why should I care unless I'm a shareholder. One way or another; I'm getting two equivalent phones for $650.

Edit: Also, as someone pointed out below, Samsung basically makes their whole phone (or could if they wanted to) and they make parts of Apple's.
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Not so fast!
adornoe@... Updated - 30th Oct
While profits are great, and what a company is in business for, the numbers are most important, because, without the numbers, which create visibility, and thus more sales, the sales and profits may disappear.

People, especially the young ones (tweens, teenagers, and even grade school ages), want what's popular, and if a product is not selling so hot with great numbers in sales, then the profits could be hurt and, poof!!, there goes that smartphone.
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RE: Smartphone wars: Samsung top dog...for now
s_jarmin 28th Oct
@toddybottom These figures are depressing after watching the story of stuff lol. But seriously, Apple is the major player in terms of stability of apps and many other ways. i use the iphone for so many things, I have tries android and I actually like it but it can not compete with the iphone seriously.
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RE: Smartphone wars: Samsung top dog...for now
sbVB 29th Oct
@toddybottom
for software developers, it is very important to observe what is the smartPhone that most users are using. The profit of the hardware maker matters only for those who invest to their companies.
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RE: Smartphone wars: Samsung top dog...for now
balispeak Updated - 23rd Nov
There are certainly a lot of details like that to take into consideration. That is a great point to bring up. I offer the thoughts above as general inspiration but clearly there are questions like the one you bring up where the most important thing will be working in honest good faith. I don?t know if best practices have emerged around things like that, but I am sure that your job is clearly identified as a fair game. Both boys and girls feel the impact of just a moments lowongan kerja pleasure, for the rest of their lives.
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Smartphone app developers are mostly deluding themselves
Patanjali 20th Jan
@sbVB
It is probably more likely, and certainly far less costly, to win a lottery.

There are relatively few successful apps, meaning that 99.999% of developers are NEVER going to break even, and most are not even going to make their first hour's effort back.

They are likely to be more successful if they support an already profitable line of business. Companies spend $10ks or $100ks to do that!

In Australia, Woolworths made a free app (iOS and Android) in which you could scan the barcodes of items in your pantry to make shopping lists that sorted the items by the aisles in your favourite store. I bet that cost them over $1m with all the back-end changes they would have had to do. It is a great app, and their developers are VERY responsive. Certainly much better than their main competitor's app.

Then I see some that in drilling down some categories, going more than a few down the list and the apps have had about 10 odd downloads, and the programmers are still working at getting them better. Lot of ongoing effort.

Now, target all web-enabled phones and there is a much larger market, but certainly not as glamourous.

Target the basic facilities all phones have, and the market is HUGE. The XXX Idol franchises made millions with premium call voting, and that is certainly low-tech.

Making an app that will appeal to enough people that actually want to part with their money is not trivial. It requires a clear target audience that has been identified as likley to use it, AND a plan to design and test it. AND have a way of getting it noticed. Most solitary app programmers are very unlikely to have all those skills, especially testing, which requires a mindset opposite that of programming (destructive vs creative).
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this isn't happening
splamco@... 28th Oct
Clearly Apple is most awesome because they make more profits off of their customers than other companies make off of theirs. Why all consumers don't make this their top shopping criteria I just don't know.
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Say what?
rhonin 28th Oct
@splamco@...

You lost me mid-way through re-read number 2...... shocked
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RE: Smartphone wars: Samsung top dog...for now
Qbt 29th Oct
@rhonin

He makes a valid point. Apple fanboys are always so proud of the fact that Apple is overcharging them (high profit margins = overcharging).
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RE: Smartphone wars: Samsung top dog...for now
anono 28th Oct
@splamco@...
You are right. Let's all buy from ZTE because they make the least profit. Why all consumers don't make this their top shopping criteria I just don't know.
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RE: Smartphone wars: Samsung top dog...for now
JOB83 29th Oct
@splamco@...
Because clearly not everyone is an iFan like you. I don't like the idea of a company profiting off me excessively for a phone with no choice when I can find similar specs with various choice at fairer prices elsewhere.
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RE: Smartphone wars: Samsung top dog...for now
superseostar 8th Nov
@splamco@... Surely, you are right with this point. I think all consumers will not make their criteria become real for shopping since there are lots of choices.
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RE: Smartphone wars: Samsung top dog...for now
trybble1 28th Oct
I'd like to see how much of that "other" category was HTC just for fun. No I am not saying that they are ruling the market, it's just that they are the only "other" vendor I can think of.
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Go Moto
rhonin 28th Oct
@trybble1

grin
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RE: Smartphone wars: Samsung top dog...for now
trybble1 28th Oct
And where is Motorola too?
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RE: Smartphone wars: Samsung top dog...for now
pupkin_z 28th Oct
@trybble1 isn't part of Google now?
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RE: Smartphone wars: Samsung top dog...for now
mmacwan83 28th Oct
Samsung has definately done much better than any other electronics giant like sony motorola or anybody else. its not just phone, but tablet, TV laptops and everything ...

I have been using the Galaxy Tab and Galaxy S2 for a while now, and i love the way samsung is different than any other company out there.. even using the same OS.. android.

I think its not the profit that counts for us as a consumer. .We are looking at it as a consumer not as a shareholder of the company..
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RE: Smartphone wars: Samsung top dog...for now
rhonin 28th Oct
@mmacwan83
Have not used the Galaxy 10 really but I replaced my iPhone4 with an S2.
Very very impressed with it.
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Samsung has a diverified portfio of successful consumer products
Patanjali 20th Jan
@mmacwan83
They have the marketplace nouse to design for what consumers want and seem pragmatic enough to promote the devices for themselves and not some some company 'magic' or ecosystem. For consumers, this means being able to just make decisions about what is in front of you, rather than ethereal promises of what you might be able to do.
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Nokia?
dave@... 28th Oct
Have you looked at Nokia's first Win7Phone offerings? They look like phones from 2010.. and that silly brightly-colored bumper doesn't help. I don't see many pre-schoolers using phones.

Maybe this plays elsewhere in the world. In the USA, most smartphone buyers are choosing between iOS and Android. Very few have gone for Windows, and Microsoft's only argument so far is that Windows 7 Phone is good for people who don't like smartphones. Unfortunately for Microsoft, those are the same people who don't buy smartphones.

And if you did want a Windows 7 Phone, Samsung's Omnia W or the HTC Titan look far better than Nokia's feeble attempt to restart themselves. Not that any of these really compare to the iPhone 4S or the various new Androids out this fall.

That was Nokia's problem going into the iPhone world -- they never really tried to compete. Same problem Palm had, same problem RIM still has. The world changed, and they're still making the same old, same old.... not competitive.
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Slow your ponies dave.....
rhonin 28th Oct
@dave@...

They are just rolling out, and not in the US.
Let's give them some time before humanity as a group collectively lays waste to the WIN/Nokia infrastructure.

plain
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RE: Smartphone wars: Samsung top dog...for now
don.wright Updated - 28th Oct
I see Android OS focused hardware manufacturers begin to decline in their sales due to Android's fragmentation issues. Developers and users alike will get tired of dealing with it. They will begin to go to (or back to) Apple or maybe even explore MS WP7 options.
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See your doctor
rhonin Updated - 28th Oct
@don.wright
You need your meds checked don.

When I walk into an ATT store and the saleperson has to search for the Win7+ phones, that tells me the reseller's are not pushing them.
When I see that change, I'll revise my opinion.

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Salesmen don't push items that don't sell
wackoae 29th Oct
@rhonin They also don't push items that have a higher rate of return.
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Not sure what has changed for the 4th Q
ArtInvent 28th Oct
Sure, Apple always has a big quarter when they intro a new phone. Most Apple people sync their phone buying with the new product intro. Then 3 quarters of coasting. Samsung has a new flagship device every quarter or so. The Galaxy Nexus is just the latest. There will be a Galaxy 3 and maybe a 4 by the end of '12 and who knows what else.
.
Samsung is uniquely positioned to be the world's dominant phone maker. Who else can claim all this: They make their own LCD and OLED screens. They make their own CPU's and memory and cameras. They basically make practically from scratch nearly every component of the phone. They don't even have to do that much software development because they get an OS for free from Google, but are perfectly open to hedge with MS or Bada or anything else that might sell. They make tons of regular phones. They are on every carrier around the world and have been for years.
.
Do they not make as much profit as Apple? Well, they are nevertheless making a lot of profit on phones, so much so that it's propping up their other divisions.
.
Personally I'm more a fan of Motorola but there's no denying Samsung is poised to dominate.
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Androids are Breeding like Bunnies
rhonin 28th Oct
@ArtInvent
The heck with a better model, bury the iPhone under a mountain of Android with Win and RIM as relish.

Nexus, Razr and Note plus the S2..... quite a line up.
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RE: Smartphone wars: Samsung top dog...for now
Woochifer 28th Oct
@ArtInvent
And keep in mind that this chart is not a true reflection of the effect that the release schedule has on Apple's sales. The sales impact from iPhone 4 is fully reflected in the Q3 2010 data, but the impact from iPhone 4S will not occur until Q4 2011. Everyone, including Apple, acknowledges that Q3 2011 was a laggard.
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Snoonw pull your head out
GoPower 28th Oct
come up for air buddy!
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RE: Smartphone wars: Samsung top dog...for now
WendellThornhill Updated - 28th Oct
In my opinion...the iPhones were never the "best" smartphones on the market; they were simply the 1st to offer a "USER-friendly" device, thereby helping it to become the most popular among the brands. To Apple's credit however, it incorporated VERY intelligent marketing; promoting easy to understand commercials, to which most non-techy consumers could relate. Also, IMO...the (current & much deserved) success of Samsung (& the other "non-Apple" brands) is NOT so much due to its devices, but that they give customers MORE access "OF" the Internet (via the Android OS) & not the 25% "watered-down" version the iPhone offers. "Watered-down" iPhones? With all of its features, price and apps (which most people will NEVER require), how dare I make such an unsubstantiated claim? My 1st example...iPhones do not (but could) "ALLOW" Adobe FLASH; a creatively intelligent, efficient and PROVEN technology, which has been in existence [as Shockwave/Macromedia FLASH] LONG before there was even an iphone on the Apple drawing board. It is THIS limitation (among others) that WILL hurt Apple as they face new ventures, challenges, struggles going forward, post Steve Jobs (may he rest in peace). Mark my words though...Apple WILL allow Flash on either its iPhone 5, 6 or 7 (sometime between 2012 & 2015). It will HAVE to, in order to compete w/ the increasingly popular Android OS phones. Despite Steve Jobs' "warnings" (either genuinely trying to "protect" his customers or arrogantly dictating their usage), most, if not ALL of the phones running the Android OS have yet to encounter the massive FLASH issues, as Mr. Jobs vehemently professed. If FLASH was plagued w/ SO many problems (which was one of the reasons Mr. Jobs denied his customers even the CHOICE to watch FLASH content on his devices), then evidently...either his FLASH argument was totally fabricated OR the iphones simply aren't up-to-par (technologically) to its competitors. Either way...congratulations to Samsung. Keep up the great work!
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You lost me at Flash
wackoae 29th Oct
@WendellThornhill Flash is the #1 vector for malware today and a battery hog that damages the user experience on ANY mobile device.
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RE: Smartphone wars: Samsung top dog...for now
UrNotPayingAttention 30th Oct
@wackoae

"Flash is the #1 vector for malware today..."

you didn't finish your statement.... "on a PC"

There, took care of that little omission for you.
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RE: Smartphone wars: Samsung top dog...for now
wesley1988 29th Oct
my neighbor's step-mother makes $80 an hour on the laptop. She has been fired from work for 5 months but last month her income was $9066 just working on the laptop for a few hours. Go to this site http://uuurl.net/x87p6
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RE: Smartphone wars: Samsung top dog...for now
rgor@... 30th Oct
I think the smartphones are only a small part of Samsung's income. Keep in mind that they make money on every iphone sold, memory, hard drives, moniters, tv, home appliances etc. It doesn't matter who is number 1, only if that particular vendor happens to sell a phone that suits your needs at an affordable price.
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RE: Smartphone wars: Samsung top dog...for now
UrNotPayingAttention 30th Oct
@rgor@...

They're also a player in hotels, medical technology and equipment, and construction equipment.

...something that's gets lost by many that wear the Apple rose colored glasses.

Samsung could kill it's smartphone and tablet lines today and be just fine.

...I imagine they figured: Hey, we're helping make them for everyone else, we might as well slap a 'Samsung' label on a few as well. wink
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Samsung and "win-win"
FrederickLeeson 30th Oct
Given that virtually every major phone producer uses (to a greater or lesser extent) components from Samsung the company can afford to smile. As long as their phone division is doing well (it does not *have* to do gangbusters) and the mobile market (and the tab-market) is growing like fun Samsung wins all the way along the line. Declaration: I do not own any Samsung mobile products and have no current plans to buy any.
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RE: Smartphone wars: Samsung top dog...for now
superseostar Updated - 8th Nov
Samsung is uniquely positioned to be the world's dominant phone maker. Who else can claim all this: They make their own LCD and OLED screens.
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RE: Smartphone wars: Samsung top dog...for now
superseostar Updated - 8th Nov
@superseostar there is a utility called pdftotext that can translate PDF files into text files on most platforms from the command line.
http://bizrank.org/
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RE: Smartphone wars: Samsung top dog...for now
yjcho03 23rd Nov
dd
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RE: Smartphone wars: Samsung top dog...for now
AdamImpress Updated - 23rd Nov
Its sure surprises me that Nokia is still as relevant as they are today. Great read! Fanboys will be fanboys but the fact in black and white is hard to ignore. Electronic Cigarette - http://www.absolutelyecigs.com
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RE: Smartphone wars: Samsung top dog...for now
SUPsurfer Updated - 24th Nov
Funny, I don't know anyone with a Samsung phone.
SUP Clothes

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