Samsung's Android success story

Samsung's Android success story

Summary: Samsung has managed to take Google's Android mobile platform and create smartphones for it that people want, capturing more than 50 percent of the smartphone market in less than three years.

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If you judge success by column inches, then you might be mistaken in believing that Apple is the king when it comes to smartphones. But Asymco's Horace Dediu posts information which shows that Korean firm Samsung has leveraged Android to come from nowhere to grab a commanding portion of the smartphone market.

Samsung's success has been little short of stellar. The company went from almost zero smartphone sales to quarterly sales of over 50 million units in two years, dwarfing the competition, including Apple.

In percentage terms, this is a unit sales growth from 3 percent during the first quarter of 2010, to 54 percent during the third quarter of this year.

Other metrics are also incredibly healthy, with the average selling price of a handset increasing from $115 in 2007, to $234 today, with a corresponding increase in operating margins from 12 percent to 21 percent.

Samsung's operating margins are now second only to Apple.

The Korean smartphone giant is even outpacing Google, the company behind the Android operating system. Samsung's operating income from mobile clearly exceeds that of Google's income from all operations.

Dediu closes by asks some key questions about Samsung's future.

"Why aren't there other vendors successful with Android? Why isn't Google successful with Android? Why isn’t Google’s Motorola successful with Android? What would happen if Samsung soaks up so much profit from mobile that it’s in a position to acquire Google and control the trajectory of their enabling platform?"

Samsung has seen a great deal of success with its Galaxy series of devices. Sales of the Samsung Galaxy S III have been strong, hitting 20 million in 100 days, and then 30 million in less than six months. According to market research firm Strategy Analytics, Samsung sold 18 million Galaxy S III handsets during the third quarter, compared to only 16.2 million for Apple's iPhone 4S, ousting Apple from the top spot.

The Galaxy S III also saw a broad release, available on Verizon, AT&T, Sprint, T-Mobile and U.S. Cellular. This made it available to as broad an audience as possible. Availability matters, whereas Apple tends to pick and choose carriers. 

The Galaxy S III is also a great device for the bring-your-own-device (BYOD) crowd. The handset has a number of enterprise-friendly features, including AuthenTec's QuickSec VPN client technology that allows users to access corporate networks when out and about.

Image source: Asymco.

Topics: Samsung, Android, Hardware, Smartphones

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22 comments
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  • Meaning...

    "Samsung's operating income from mobile clearly exceeds that of Google's income from all operations."


    What does this mean? Simple: if Google decided someday to abandon the Android platform, Samsung would likely buy it from them (just the parts that aren't already open source, of course, like the trademark and the Play store). Android will probably *never* die.
    dsf3g
  • Samsung's Android success story

    It took them 7 years since android was released in 2008 but who's counting?
    Loverock Davidson-
    • Re: but who's counting?

      Somebody who knows how to count.
      ldo17
  • It is not specifically Android success story, it is just Samsung's success

    ... story.

    Samsung sells millions of Bada smartphones. And the bulk of Android devices are sold without their buyers even really understanding the type of OS they are using and what it is capable of. They just wanted cheap phones with screen big enough to look at photos, and that is about it. This is why web usage statistics is so dramatically different from just "smartphone" sales estimations -- most of those cheap Android devices are not really used as smartphones.

    Also, Samsung got its traction after closely mimicking Apple, and most of its cheaper phones still too similar to products of American company (higher end models like SGS3 already look different; though not in software part yet).

    Another aspect is that Samsung offers much wider choice of devices and it updates its flagman smartphones much more often than Apple.

    So this set of circumstances is whole story behind Samsung's success. Not really much to do with Android per se (Android did not help HTC or Motorola).
    DDERSSS
    • Re: Samsung sells millions of Bada smartphones.

      Which is another platform handily outselling Microsoft Windows Phone, FYI.
      ldo17
    • Haters gonna hate

      Yeah we know the story; samsung only exist because of apple. In fact, smartphones only exist because of apple. Lets go the whole way, the world only exists because of apple.

      We know you hate android with a passion which is why all your comments sound the same. Tell me this, do you think samsung sales would be as high if they were on a failing OS like WP7? No, I doubt it either so where does that leave your comment about android not really a factor?
      Little Old Man
      • Samsung DOES make Windows Phones!

        "Tell me this, do you think samsung sales would be as high if they were on a failing OS like WP7?"

        Samsung DOES make Windows Phones, the best of the first generation WP7 phones was the Samsung Focus, and they are releasing Windows 8 phones as well...the first one is the Ativ S....
        Doctor Demento
        • Clearly it wasn't a success for them

          yet they achieve unrivalled sales (across the range) for android phones. No one did well out of WP7 but samsung are doing well off the back of android.

          So I think you do get my point, even if you try hard not to.
          Little Old Man
    • Stretching the truth here

      BadaOS is selling in millions, for small values of "millions", at about 3% of the smartphone market. It's ahead of Microsoft's 2.3% for the moment, though insignificant compared to Android.

      It's a popular myth that Android buyers are going for a cheap device, that they don't even know they have smartphones, etc. At least among iPhone fanbois. That might have flown for SymbianOS, largely due to the fact that Nokia didn't even ship the Ovi Store app on most devices.

      But this is a different era. Everyone understands the difference, and they only pay smartphone data rates for real smartphones. And, as the article points out, the world's best selling smartphone last quarter wasn't a cheap entry level smartphone, it was Samsung's excellent Galaxy SIII. Everyone who buys that device is doing the same basic things that iPhone 5 buyers are doing.
      Hazydave
      • Popular Android fanboys' myth is that most of Android know or care about ..

        ... what OS they have.

        Web usage statistics is very blunt about it: most of Android phones are used just as "feature phones".

        So face the reality, HazyDazy.
        DDERSSS
        • Re: most of Android phones are used just as "feature phones".

          But "feature phones" are mainly used for web browsing (that being the main "feature" that makes them "feature phones", after all), rather than running native apps (the capability that puts the "smart" into "smartphones").

          So the fact that IOS accounts for a disproportionate amount of web traffic compared to Android suggests that is in fact Apple's platform that is being used more like "feature phones", rather than Android, don't you think?
          ldo17
          • No, feature phones are used for making and looking at photos

            Not for browsing.
            DDERSSS
  • HTC needs a BRAND and it needs it badly!

    How they release a new range each year is killing them. Desire in 2010 (now part of their budget/mid-range models), Sensation in 2011 and One in 2012.

    People think iPhone and they think Premium, people also think Galaxy and they think Premium. HTC keep changing their product names, there's nothing for people to catch on to.
    bradavon
    • Premium

      Funny you should use the word Premium. Motorola, HTC and Apple's phones all feel like premium products when you hold them. Even though the tech is top shelf, Samsung's phones feel like cheap plastic toys.
      MajorlyCool
      • Yup

        As much as I love my Galaxy Nexus, I have to agree. It's not even the use of plastic... the high quality polycarbonate in my Canon 60D, or the Kevlar in the RAZR, both plastics, both of seemingly high quality. I haven't seen one yet, but I gather the plastic in the Nokia Lumia 920 is similar. But the plastic used in the GN is soft, easily scratched, and belies the quality of rest of the design. I looked at Samsung tablets, but went for Asus, in part due to the metal vs plastic.

        They should fix this.
        Hazydave
  • Tech and consumer electronics is tough business

    Microsoft's hardware partners are chugging along at an average 4-5% margin, some better and some worse, but none great. Nokia alone accounts for about -8% of the smartphone industry profits - and they don't even make an Android phone. Having some big money losing players can really skew the results.
    symbolset
  • Samsung's fate

    I believe that Samsung should not worry about Apple or Nokia. They should be worried of the other copycats, like ZTE and Huawei. They share the same culture and the same disrespect of intellectual property.

    Samsung might want to buy Google, or at least Android, but that is not going to happen. Google exist not because of the money, but because of the intelligence it collects from most Internet users on Earth. The non-name agencies that created Google are not going to let that happen --- even if they shut down Google and re-incarnate the database in some new "clean" company. Just that won't be Samsung.

    Still, this success has nothing to do with Android. Once upon a time, another "free" OS ruled them all - Symbian. Where is it now?
    danbi
    • Re: "and the same disrespect of intellectual property"

      Is that code for "same disrespect for anticompetitive monopolies"?
      ldo17
    • Fanboy no.2

      Bit slow on the trolling danbi, ddersss beat you to it again!

      Go ask VirnetX whether apple have any respect for intellectual property or do you still contend it's only asian companies that could get sued for ripping off other people's legitimate patents. Where do you stand on that case? If apple got caught doing it, does that mean all US companies have a culture of IP theft?

      As for:
      "Still, this success has nothing to do with Android"

      Well done, that must be fanboy post of the day. I, along with countless others, chose a samsung phone *because it was running android*. So your statement is pure apple fanboyism and complete BS. You should get together with ddersss sometime to discuss perceived android failings. Hours of fun for you both.
      Little Old Man
    • Same Culture

      "I believe that Samsung should not worry about Apple or Nokia. They should be worried of the other copycats, like ZTE and Huawei. They share the same culture and the same disrespect of intellectual property."

      What culture are you referring to?
      chun.wai.wong@...