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Bryan M. Wolfe
| August 6, 2012
The Smartphone Profit King Remains ...
In the second quarter, Samsung overpowered Apple in the race to sell the most smartphones. In fact, the company sold nearly double the number of phones than did the iPhone maker. Does this matter? Not too much, according to AllThingsD. Samsung is experiencing what could best be described as the best of times, and the worst of times. The South Korean company has become quite successful in the smartphone market Cupertino perfected since the first iPhone arrived in 2007. This comes despite the ongoing legal battle against Apple over patent rights. In the previous quarter, Samsung sold 50 million smartphones. This compared to the 26 million iPhones Apple sold during the same period of time. However, beyond this giving Samsung enormous bragging rights, it means very little where it counts. [caption id="attachment_327026" align="aligncenter" width="1000"] Smartphone profits[/caption] Although Apple shipped only about 6 percent of the industry’s smartphones and tablets in the second quarter, they accounted for 43 percent of the industry’s revenues. More importantly, Apple took 77 percent of the industry’s operating profits, despite being “a seasonally weak period,” for iPhone sales. In other words, Samsung’s lead in sales means very little when compared to Apple’s profits. As Raymond James analyst Tavis McCourt concludes:
Ultimately, profits are the feedstock of innovation; and, innovation drives profits. 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?If you’re Apple, probably not. As a reminder, Apple is expected to unveil the sixth-generation iPhone on Sept. 12. Source: AllThingsD