Samsung Electronics’ Galaxy S3

Galaxy S3 debut dims outlook for new iPhone to come

By Cho Mu-hyun

Can Samsung Electronics beat Apple to become the sole leader of the global “smart industry” both in name and bottom line?

The latest report from ABI Research shows that Samsung and Apple combined took 55 percent of the smartphone market and 90 percent of the profits in the first quarter, a huge jump from the 19 percent the two held respectively for last year.

Samsung topped the industry with 43 million smartphones shipped during the first three months of the year. But Apple, which sold 35 million iPhones during the period, continues to lead in the money-making department as it dictates the content value chain of its customers, unlike Samsung which depends on Google’s Android mobile platform.

While there are a slew of handset makers, including LG Electronics, HTC, Motorola and Sony Ericsson, producing Android-powered devices, Samsung has clearly established itself as the flagship manufacturer, and thus, the most formidable contender to challenge Apple’s market influence.

There is already enough bad blood between the two as they engage in a bitter intellectual property dispute, which started last year when Apple accused Samsung of copying the look and feel of its smartphones and touch-screen tablets for its Galaxy series of devices. Samsung countered by accusing Apple of infringing on its wireless patents.

Industry sources say that the smartphone sales gap between Samsung and Apple will likely become wider in the coming months with Samsung introducing its much-hyped Galaxy S3 further worldwide. Apple’s counter will be its new iPhone, which may or may not be the iPhone 5, which according to rumors will be unveiled around October.

Samsung products’ average sale prices have risen to equal those of Apple, due to the Galaxy S3’s relatively high MLCC (multi layer chip capacity) and FC-CSP (flip chip –chip scale package). As the Korean company far outdoes its American counterpart in productivity, it will likely gain an upper hand in revenue as well.

Kim Uoon-ho, an analyst at Hanwha Securities predicted that Samsung will comfortably sell 30 to 40 million Galaxy S3 handsets by the end of this year to further cement the company’s top position globally.

The company has been soaring high in the smartphone market since it released its first Galaxy smartphone in 2010. The company’s year-to-year shipments increased from 22.9 million in 2010 to 94 million last year, according to numbers from the International Data Corporation (IDC).

The Korean technology giant was also the only company along with Japan’s Sony to show growth out of the top 10 firms for the first quarter.

Finnish handset giant Nokia, which was late in joining the smartphone race and is feeling the consequences, shipped 11.9 million phones in the same period.

The firm has been desperate to maintain its stature amid a hammering by its rivals, having announced recently that its plans to cut 10,000 of its employees by the end of the year.

The firm will also give up its self-developed operating system Symbian for Microsoft’s Windows Phone. Global rating agencies Moody’s Investor Services, Fitch Ratings and Standard & Poor’s have all downgraded the company’s credit ratings to junk level recently.

Research in Motion (RIM) is closely catching up to Nokia, having shipped 11.1 million of its Blackberry phones. ABI research predict that the Finnish company will cede the No.3 spot to RIM as it needs to grow its “Windows Phones business 5,000 percent in 2012 just to offset declines in Symbian shipments.”

Sony moved 7 million phones in the first quarter followed by China’s Huawei and ZTE with 6.2 million and 4.9 million, respectively.

Smartphone shipments grew 41 percent to a total 144.6 million from the same period of last year, proving that the touch-screen handset will become the next standard in mobile phones.

``Smartphone sales are becoming of paramount importance at a worldwide level. Smartphone volumes contributed to approximately 43.9 percent of overall sales for Samsung as opposed to 16 percent for Nokia,’’ says Gartner analyst Anshul Gupta.

Total handset shipments saw their first decline since early 2009 at 419 million, a 2 percent decline year-on-year.

In operating systems (OS), the grips of the top two firms are also tightening. According to research firm Gartner, 81 million phones using Google’s Android, including Samsung’s Galaxy line, were shipped in the first quarter and held a 56.1 percent worldwide market share _ Apple’s iOS accounted for 22.9 percent.

For the same period in 2011, Android held a 36.4 percent share to iOS’s 16.9 percent. Samsung and Apple are both eyeing China, the second largest market behind the United States to increase sales.