Galaxy phones help Samsung bank record profit

News 27 Apr, 2012

Analysts claim smartphone market is close to becoming a two-horse race, as Samsung and Apple vie for dominance.

Samsung has posted a record $5.2 billion (£3.21 billion) quarterly profit after shifting more than 20,000 Galaxy smartphones an hour between January and March.

The firm, whose $190 billion (£117.4 billion) market value is 11 times that of Japanese rival Sony, sold 93.5 million handsets in the first quarter, according to Strategy Analytics.

The total included 44.5 million smartphones, giving Samsung a 30.6 percent share of the high-end market. Apple's sales of 35.1 million iPhones gave it a 24.1 percent share.

The near duopoly in high-end smartphones is unlikely to come under much threat this year

"Samsung and Apple are out-competing most major rivals and the smartphone market is at risk of becoming a two-horse race," said Neil Mawston, an analyst at Strategy Analytics.

The near duopoly in high-end smartphones is unlikely to come under much threat this year or next, according to Bernstein analysts, and Samsung will look to keep that momentum going next week with the London launch of its third generation Galaxy S device.

"The Galaxy S 3's specifications are expected to be sensational and it's already drawing strong interest from the market and consumers," said Brian Park, an analyst at Tong Yang Securities.

The new Galaxy will be powered by Samsung's quad-core microprocessor, which the company hopes to see used in handsets sold by Nokia, HTC and Motorola, as well as Apple, its biggest customer for components.

While Apple said this week that iPhone 4S sales boosted its quarterly revenue in China five-fold, there are more Samsung handsets than Apple phones in the world's biggest mobile market.

Samsung said it increased its China smartphone market share to just above its global average, suggesting it took more than 30 percent share of a market where, unlike Apple, it already has deals with all three big telecoms operators.

Samsung's quarterly handset division profits nearly tripled to $3.8 billion, accounting for 73 percent of total profit, and operating margins jumped to 18.4 percent from 12 percent in the preceding quarter on strong sales of the Galaxy S and the Note phone/tablet.

Mobile warning

In a sign that high-end smartphones are where the money is, Foxconn International Holdings warned of a deepening first-half loss on weak orders.

While its Taiwanese parent assembles iPads and iPhones, Foxconn International puts together handsets for Motorola, Sony and others, indicating a wider gulf between high-end smartphones and other mobile devices.

Tong Yang's Park said Samsung's handset earnings growth may slow later this year, with the likely third-quarter launch of Apple's iPhone 5, "but the recovery of chips and displays will more than offset potential drops, sustaining earnings momentum."