Samsung shipped 2x as many phones as Apple, earned half as muchWhile Samsung itself does not report unit shipments, estimates from a closely positioned marketing company indicate that it shipped 89 million phones in the March quarter, nearly 20 million more than the year ago quarter, despite earning less money this year, and half as much as Apple.
Strategy Analytics reported that Samsung increased its phone shipments from 69.4 million units in the year ago quarter to 89 million, but Samsung itself just reported earning 3.3 percent lower profits for the quarter compared to the previous year.
Samsung Electronics blamed disappointing sales of both flat screen displays and high end smartphones for its dip in operating profits, which totaled 8.5 trillion South Korean won ($8.2 billion). The company also reported a favorable increase in profits from its System LSI chip foundry.
Apple is a major customer of Samsung Electronics's Device Solutions (for components including displays and fabrication of Apple's chips), and a primary competitor to Samsung's Mobile group, which builds phones, tablets, netbooks and PCs.
Samsung Mobile reported profits of 6.43 trillion won ($6.2 billion), down 1.2 percent from 6.51 trillion won in profit a year earlier. For the same quarter, Apple reported more than twice as much operating income, $13.6 billion, an increase of 8.24 percent over the year ago quarter.
Compared to the entirety of Samsung Electronics, Apple reported holding 2.8 times as much cash, while its cash flow from operations was $13.5 billion, compared to 2.21 trillion won ($11.8 billion) for all of Samsung Electronics.
Warnings and subterfuge in 2013
Samsung has been warning investors for more than a year of fading profits and increased competition. In January 2013, the company stated, "the furious growth spurt seen in the global smartphone market last year is expected to be pacified by intensifying price competition, compounded by a slew of new products."
Throughout the year, Samsung continued to note to its investors that sales of its premium smartphone were flat and that its shipment volume growth was "led by increased sales of mass-market models," phones like the Galaxy Y—a 3G-only Android 2.x phone with an ARMv6 chip, 290MB of RAM, a 2MP camera and a 3 inch, 240x320 screen—specifications inferior to Apple's obsolete iPhone 3G from 2008.
Last July, Strategy Analytics issued a widely syndicated press release that claimed Samsung had overtaken Apple in mobile profits, a claim that was simply not accurate.
Despite Samsung's own warnings of flat premium phone sales in its earning reports, Strategy Analytics Executive Director Neil Mawston continued to issue statements which suggested that nothing was wrong, reports that were broadly syndicated by sites like CNET.
"While shipments of the flagship Galaxy S4 model softened," Mawston stated in October, "solid demand for the new Note 3 phablet and for mass-market devices like the Galaxy Y helped to lift Samsung's volumes."
A focus on volume
Six months ago, Strategy Analytics was similarly focusing attention on market share numbers, noting that "Apple grew just 26 percent annually during Q3 2013, which is around half the overall smartphone industry average of 45 percent," effectively equating Samsung's "mass market" Galaxy Y with Apple's iPhone 5.
Today, the firm again drew exclusive attention to volume and market share, stating that "Apple grew a below-average 17 percent annually and shipped 43.7 million iPhones worldwide for 15 percent marketshare in Q1 2014, falling from the 17 percent level recorded during Q1 2013. Apple remains strong in the premium smartphone segment, but a lack of presence in the entry-level category continues to cost it lost volumes in fast-growing emerging markets such as Latin America."
However, according to Strategy Analytics' own estimates, Apple's addition of 6.3 million new iPhone sales in the March quarter was better than both Huawei (3.4 million new sales) and Lenovo (4.9 million new sales), the only other companies the firm detailed shipment numbers for in its report.
Strategy Analytics' latest press release makes no mention of profits.
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