Samsung sales take bite of Apple smartphone market

The range of devicies offered by Samsung gives it an edge over rival Apple's relatively high-end focus. Picture: Getty
The range of devicies offered by Samsung gives it an edge over rival Apple's relatively high-end focus. Picture: Getty
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ELECTRONICS giant Samsung grabbed a bigger share of the lucrative smartphone market from arch rival Apple in the first months of 2013 with quarterly sales of around £19 billion even before the launch of its latest gadget.

Its mobile phone division helped the South Korean giant post record first-quarter net profit, up 42 per cent year-on-year to £4.2 billion.

A flood of Android-powered devices lifted the group’s mobile phone shipments about 60 per cent, to 70.7 million, giving it a third of the global market, up from about 29 per cent a year earlier. Global sales from its smartphone division totalled around £19bn, despite a fall in advertising spending.

The momentum surprised analysts, who had expected mobile phone sales to be subdued following the Christmas shopping season and that tech savvy buyers would delay getting a new phone until the release of the Galaxy S4 to ensure they got the newest model available.

Apple recently cited the upcoming release of a new iPhone model as a reason for a slowdown in sales of older models. Sales of the iPhone 5 helped Apple’s volumes grow 6.6 per cent annually to 37.4 million phones in the last quarter, but that was not enough to stop its share of the market dropping from 23 per cent to 17.3 per cent, according to research firm IDC.

Samsung launched the S4 in its home South Korean market yesterday and starts UK and US sales today. Analysts expect Samsung’s profits to reach new highs in the second and third quarters if S4 sales are strong.

The device, which allows users to control the screen using their eyes, is said to pose the greatest threat yet to Apple’s iPhone.

Jan Dawson, an analyst at research firm Ovum, said Samsung had the benefit of a greater range of devices compared with the relatively high-end focus of Apple, although the latter enjoys much higher margins.

“It’s also helpful that Samsung has device launches throughout the year, which help to keep demand going on a more consistent basis, whereas Apple suffers from strong seasonality,” she said. “The next quarter should see a rise in marketing spending around the launch of the Galaxy S4, which may impact margins, though shipments should also go up.”

However, Samsung predicted that growth in smartphone sales would stay flat in the coming months amid intensifying competition in the lower and middle sections of the market, before picking up in the second half of the year.

Robert Yi, head of investor relations, said: “We may experience stiffer competition in the mobile business due to expansion in the mid to low-end smartphone market.”

Samsung, based in Suwon, South Korea, is also the world’s largest maker of memory chips, televisions, mobile handsets and liquid crystal display panels.

However, it is increasingly dependant on its thriving smartphone division, which accounted for around 75 per cent of the latest quarter’s profits.

That helped offset sluggish demand for TVs and a still weak recovery in display panel sales.