Editorial: Sorry Android bloggers, but Samsung's Galaxy S7 didn't outsell Apple's iPhone 6s

Samsung, the underdog who's always on top

Some facts are not controversial. Samsung consistently ships greater numbers of phones than Apple. However, the reason why Apple is so much more profitable and influential than Samsung relates to the quality of the phones Apple sells, not the total unit numbers.

That's reflected in Apple's Average Selling Prices for iPhones, which have hovered above $650 as Android phones flirt with $200. While many Chinese phone makers almost exclusively make cheap phones (and therefore earn very little, if anything), Samsung offers flagship models that cost as much or more than iPhones. The problem is that Samsung can't manage to sell these premium phones in iPhone-like quantities.

Back in 2014, Samsung reached a peak number of flagship Galaxy S4 sales that coincided with record profits from its phone making IM division. However, when Apple launched iPhone 6 it eviscerated Samsung's high end sales. While the company's total phone shipments remained about the same, its premium models saw unit sales declines of around 50 percent, resulting in a devastating blow to its profitability.

This year, Samsung's premium Galaxy S7 sales have indeed performed better, relative to the last two years of slump. However, the company's performance is nowhere near Apple's and only in line with the Galaxy S4— a phone that was outsold by iPhone 5.

3 days of iPhone 6s outsold 3 weeks of Galaxy S7

Samsung has historically launched its Galaxy S flagship in April, missing out on both the Western holiday quarter and China's Lunar New Year; both are peak quarters for Apple's highly cyclical iPhone sales. This isn't on accident or because the company is stupid; Samsung knows it can't directly compete against an Apple launch so it purposely avoids doing so.

This year, Samsung launched its Galaxy S7 earlier than usual on March 11. This enabled Samsung to get a month-long jump on two flagship launches of its rivals: LG and HTC. Samsung didn't report official sales numbers, but is estimated to have shipped around 10 million S7 and S7 Edge models in the remaining three weeks of the March quarter, out of the 82 million smartphones IDC estimates that Samsung shipped in total.

By way of comparison, at the weekend launch of iPhone 6s last Sept 25, Apple announced sales of over 13 million units across 3 days. In total, Apple sold 75 million iPhones in the launch quarter, the most it has ever sold.

None of these were "carrier friendly, good enough" models. They were all premium priced iPhones with an ASP of $650. During that same winter quarter, Samsung still shipped millions more total phones than Apple, but it earned much less. In the March quarter, Samsung IM earned $3.38 billion vs Apple's $13.987 billion.

Also notable is the fact that Samsung similarly scrambled to launch its larger flagship, the Galaxy Note 5, earlier than usual, too. Previously launched in October, it was instead moved up to August last year in an effort to get a jump on Apple's iPhone 6s Plus. That doesn't seem to have mattered, because Apple still exceeded its previous peak in launch weekend and total quarterly sales.

Apple has a problem but it's not Samsung

Despite achieving a record fiscal Q1 over the winter, Apple's earnings and guidance for Q2 raised concerns of slowing growth. Apple blamed a global economic downturn, and in particular noted the affect of unfavorable currency exchange rates. A strong U.S. dollar was effectively raising Apple's prices for almost everyone outside the U.S., and particularly in China. Incidentally, that's a problem Samsung doesn't face because it reports earnings in Korean Won.

However, rather than accepting Apple's figures, a variety of analysts and bloggers invented a New Realty where there's no longer any growth potential for premium smartphones, particularly in mature markets like the U.S., where many were repeating verbatim that "everyone who wants an iPhone already has an iPhone."

After a solid three months of preaching the gospel of Peak Phone, many of these same people have done a 180 and are now claiming that Samsung is showing Apple how to sell growing numbers of premium phones.

They're pointing to a global year-over-year quarterly decline in iPhone sales by Apple compared to an increase in Galaxy S7 sales by Samsung— a launch quarter with an estimated 25 percent growth over the S6 (according to data from Counterpoint Research.)

However, context is relevant. Last year, Apple sold 61.2 million iPhones in Q2; this year sales reached "only" 51.2 million. Samsung's premium Galaxy S7— despite a big 25 percent year-over-year jump— still only reached 10 million. Counterpoint attributed Samsung's Galaxy S7 "growth" to the previous failure of the S6

Counterpoint attributed Samsung's Galaxy S7 "growth" to the previous failure of the S6. The firm noted that "Samsung lost the window of opportunity" last year in being unable to satisfy customer demand due to supply constraints in the models customers wanted.

Samsung's "growth" came, not from being more exciting than iPhones, but in being less incompetent in this year's Galaxy S launch. It also came from increased promotional bundling deals that Counterpoint noted "included VR headsets, buy-one-get-one deals, tablets and even televisions."

And rather than being real growth, Counterpoint's research director Neil Shah estimated that the Galaxy S7 was only "on par with the popular S4 model," which launched three years ago.

Apple's sales were down from its year-ago iPhone 6 sales peak, but up dramatically from 2014's iPhone 5. Samsung's flagship has been down for years, and has only returned to the frozen performance of its own iPhone 5 rival. When you compare percentages of growth in different numbers, you arrive at often meaningless statistics that can be very misleading.

Further, while Samsung reversed the downward trend in its flagship, its total sales of smartphones were actually slightly down. IDC observed in April that "Samsung remained the leader in the worldwide smartphone market despite a year-over-year decline of 0.6% in shipments."

So while Apple was immediately assumed to be permanently unable to grow after one quarter of failing to exceed its year ago peak sales related to iPhone 6, Samsung was given two years to return to its former peak from 2014, and celebrated for "growing" all that time, despite still having made no real progress from that former peak.

"Apple versus Samsung is so over"

This week, Lauren Guenveur of Kantar noted in the firms' Worldpanel report that, "anyone still focusing on these two giant competitors, however, is missing the bigger picture."

Erasing the idea that iPhone buyers were flocking to Samsung, Guenveur noted that in the U.S., "the majority of sales came from customers repurchasing and upgrading within their preferred brand. Among those intending to change devices within the next year, 88% of current Apple users and 86% of current Samsung users intend to stay loyal."

Among defectors, however, the rate of buyers switching to Apple was 2.8 times higher: "just 5% of Samsung purchases came from those switching away from Apple, while 14% of Apple purchasers came from those switching away from Samsung." "Just 5% of Samsung purchases came from those switching away from Apple, while 14% of Apple purchasers came from those switching away from Samsung"

Kantar Worldpanel data is not based on sales channel data. It's compiled from a surveys of participants. That makes it useful for noting broad trends.

But based on that report, Vlad Savov wrote for The Verge that "Samsung's Galaxy S7 is outselling Apple's iPhone 6S in the US," although noting that "granted, it's not a fair fight, owing to Samsung's S7 and S7 Edge being the newer handsets by half a year."

It's also "not really fair" to ignore 13 million iPhone 6s sold in its first three days, plus another 113 million iPhones sold across two quarters, and then look at a fraction of Samsung's sales (exuberant estimates say the company sold maybe 25 million premium phones across two quarters of 2016) and portray survey results as definitive in making sales comparisons.

Apple and Samsung globally

The Verge report also ignored the rest of Kantar's data. That includes figures for China, "the world's largest smartphone market," which showed that Samsung has seen its once-leading share in urban markets collapse from 34 percent back in 2014 to 9 percent two years later. Samsung's top spot in that market is now occupied by Apple and Huawei.

Further, while Savov called Samsung's relatively high brand loyalty in the U.S. a "monumental achievement," he ignored the situation in China, where Kantar's said brand loyalty "remained low."

Among Huawei's buyers, Kantar reported that 24 percent switched from Samsung phones, and among iPhone buyers, 25 percent switched from Samsung, an even higher rate than in the U.S.

That aligns with data presented by Apple's chief executive Tim Cook, who has noted record numbers of Android switchers buying iPhones.

Samsung should be applauded for fixing its Galaxy S supply problems this year. But it doesn't need fake headlines pretending that it's performing better than Apple, especially given that in reality it hasn't grown its premium sales at all over the last two years, is making no real progress in significantly expanding its flat sales of smartphones in general, and has lost its leadership position in China entirely.