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October 28, 2011

Samsung trumps Apple to take smartphone crown

South Korean company doubles profits to a record $2.2bn

By CBR Staff Writer

South Korean Electronics company Samsung has overtaken Apple as the world’s top smartphone maker in the third quarter ending in September.

Samsung beat Apple with a 44% increase in shipments, and taking a 23.8% market share. Apple was at a distant second with 14.6% market share, according to research firm Strategy Analytics. Finnish phone maker Nokia was not far behind Apple with a 14.4% share.

In Q2, Apple had become the world’s largest smartphone vendor by volume with 18.5% market share, ahead of Samsung and Nokia. However, Samsung surpassed Apple in Q3 owing to a jump in its profits. Samsung’s profits more than doubled from a year ago to a record 2.5 trillion won ($2.2bn), accounting for 60% of Samsung’s total profit.

Samsung’s rise to the top has been impressive; the same quarter last year it shipped just 7.5 million smartphones. However the release of the Galaxy S2 has given the Korean company a big boost, Strategy Analytics said. By contrast the wait for the release of Apple’s iPhone 4S device slowed growth figures for the Cupertino firm.

"We believe Apple’s growth during the third quarter was affected by consumers and operators awaiting the launch of the new iPhone 4S in the fourth quarter, volatile economic conditions in several key countries, and tougher competition from Samsung’s popular Galaxy S2 model," said Neil Mawston, director at Strategy Analytics.

Apple’s iPhone 4S sold over four million units in its first three days on sale, suggesting the fourth quarter figures may look more favourable for Apple.

"Samsung’s rise has been driven by a blend of elegant hardware designs, popular Android services, memorable sub-brands and extensive global distribution. Samsung has demonstrated that it is possible, at least in the short term, to differentiate and grow by using the Android ecosystem," added senior analyst Alex Spektor.

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For Nokia the switch to Windows Phone and the subsequent delay in bringing new models to market has resulted in its market share falling from 32.7% this time last year to 14.4% this time. However Strategy Analytics has hope for the firm.

"Nokia reached 14% global smartphone share in Q3 2011, more than halving from 33% in Q3 2010. The transition from Symbian to Microsoft as Nokia’s main smartphone platform has clearly been a very challenging process this year. The recent launch of the new Microsoft Lumia portfolio has helped to raise Nokia’s profile, and Nokia will be hoping the partnership with Microsoft can drive at least an L-shaped recovery in its global smartphone market share over the next few months," said Tom Kang, director at Strategy Analytics.

Both Samsung and Apple are fighting a long patent battle in several countries. The South Korean company has been accued of slavishly copying Apple’s design and software. Apple is also at loggerheads with Android over similar concerns.

The late Apple boss Steve Jobs vowed to "destroy" Android, according to Walter Isaacson’s biography of him. According to Isaacson Jobs was particularly angry when HTC released an Android phone that had many features similar to those of the iPhone.

"I will spend my last dying breath if I need to, and I will spend every penny of Apple’s $40 billion in the bank, to right this wrong," Jobs is reported to have said. "I’m going to destroy Android, because it’s a stolen product. I’m willing to go thermonuclear war on this."

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