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Samsung overtakes Apple as most profitable global handset maker

Apple 'trapped in a pincer movement' between cheap 3-inchers and bigger 5-inchers

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Samsung has overtaken Apple in worldwide handset-sales profits, banking $5.2bn versus Cupertino's $4.6bn in the second quarter of 2013, according to the latest data from Strategy Analytics.

"With strong volumes, high wholesale prices and tight cost controls, Samsung has finally succeeded in becoming the handset industry's largest and most profitable vendor," writes Stategy Analytics' Neil Mawston in a blog post on Friday.

It should be noted that Strategy Analytics is reporting their operating profit estimates for all handsets, and that "The term 'handset' includes all smartphones and feature phones combined."

According to Mawston, Apple was the world's most profitable handset vendor from the third quarter of 2009 through the first quarter of this year, but in the most recently completed quarter, "Samsung is performing well in the US market, while Huawei, ZTE and other local brands are growing vigorously in China."

Concerning that 1.3 billion–customer market, Apple CEO Tim Cook admitted when announcing Apple's third fiscal quarter financial results this Tuesday, "China was weaker in the quarter."

Apple, by the way, reports Chinese revenues in a category it identifies as Greater China, which includes China, Hong Kong, and Taiwan. In the quarter which ended in June 2012, Apple had an operating income of $2.47bn in all its product categories in Greater China. In its just-completed quarter – the quarter Strategy Analytics strategically analyzed – that figure dropped to $1.44bn, a decline of 42 per cent.

Of the iPhone specifically, Apple's SEC filing for that just-completed quarter notes, "All of the Company’s operating segments except Greater China experienced increases in net sales and unit sales of iPhone during the third quarter of 2013 compared to the same period in 2012."

In a separate blog post on Friday, Strategy Analytics' Woody Oh noted that global smartphone shipments – not all handsets – grew to 230 million units in the second quarter of 2013, a 47 per cent increase year-on-year.

"Samsung captured one-third of all smartphone volumes worldwide, while Apple’s marketshare fell to its lowest level for three years," Oh wrote.

In that same blog post, Mawstong offered his opinion that Apple was stuck between a rock and a hard place. "The current iPhone portfolio is under-performing," he wrote, "and Apple is at risk of being trapped in a pincer movement between rival 3-inch Android models at the low-end and 5-inch Android models at the high-end." ®

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