Samsung Tops Apple in Smartphone Profitability — Yet Challenges Remain

Whoever you side with in the ongoing Samsung versus Apple rivalry, Samsung’s momentum is undeniable — the company reported nearly triple the smartphone sales in the last quarter compared with the same period a year earlier. (Yes, Apple did not introduce a major new smartphone during this timeframe.)

According to Strategy Analytics, Samsung sold 107 million units between April and June, giving the company a 27.7% share of the global smartphone market.

Nokia followed with 61.1 million units sold, holding a 15.8% share, while Apple placed third with 31.2 million units and an 8.1% share.

Neil Shah, senior analyst at Strategy Analytics, noted: “This was the mobile phone industry’s fastest growth rate since the second quarter of 2012.”

It may be surprising, then, that Samsung — despite launching its flagship Galaxy S4 in late April — saw profits dip by 3.5% from the previous quarter. Apple, by contrast, appears poised to refresh its iPhone lineup later this year, and is widely expected to introduce a lower-cost model aimed at the growing mid-range market, along with other new products and an updated iPad.

The iPad also experienced a decline for the first time, with shipments falling 14% to 14.6 million units in Q2 2013. That drop coincided with strong growth in Android tablets, which reached 51.7 million devices over the same period — a 51% increase year over year.

Google’s updated Nexus 7, manufactured by ASUS and announced recently, boasts one of the highest pixel densities available on a tablet and quickly sold out, indicating continued demand for Android hardware.

While a full comparison must wait until Apple rolls out its planned updates and new models, the current picture shows Android devices gaining ground and Samsung aggressively pursuing increased profits. Alongside what some analysts describe as “weak” smartphone profit growth, Samsung is investing $1 billion in semiconductor research — a move the company hopes will strengthen future performance.

What do you think about Samsung’s position in the mobile industry?