The remarkable ascent of Samsung Electronics Co. Ltd. – from a nobody to mobile industry heavyweight in just a few years – has been largely obscured by the huge shadow of Apple Inc.
Yet, while the iPhone continues to capture the spotlight and companies such as Research In Motion Ltd. recalibrate in a reshaped mobile landscape, Samsung this week quietly pushed Finnish giant Nokia Corp. off its pedestal as the world’s largest manufacturer of mobile phones.
South Korean-based Samsung and Apple together are now responsible for 55 per cent of global smartphone shipments, according to U.K.-based Strategy Analytics, and together earned about 95 per cent of handset industry profits in the fourth quarter, according to Canaccord Genuity analyst Mike Walkley.
On Friday, Samsung reported first-quarter earnings that included shipments of 93.5 million units, surpassing Nokia, which has been the top producer by volume of mobile phones for 14 years but shipped only 82.7 million in the same period, according to Strategy Analytics.
Samsung posted first-quarter net income of 5.05-trillion won ($4.5-billion U.S.), beating analysts’ estimates. Its shipments for the first quarter were 36 per cent higher than a year earlier, and its shares hit an all-time high on the news, gaining 2.5 per cent to a record 1.38-million won ($1,200) at the close in Seoul.
That values the company at about $190-billion – far less than Apple’s whopping $562-billion capitalization, but still far larger than many of its now-shrunken rivals.
But success comes quickly in consumer technology, as does defeat. The huge profits enjoyed by Apple and Samsung have come at the expense of some of the industry’s long-time players, such as Waterloo, Ont.-based RIM and Espoo, Finland-based Nokia.
RIM is undergoing a strategic review as its new chief executive officer tries to refocus the company’s efforts on a new operating system, BlackBerry 10, which RIM hopes will re-establish it in developed markets and preserve growth in emerging markets.
Nokia’s Canadian-born CEO Stephen Elop, meanwhile, struck a partnership with Microsoft Corp. to run Windows Phone software on Nokia’s high-end devices, but has so far been unable to mount a comeback in the United States.
Neil Mawston, executive director at Strategy Analytics’ global wireless practice, said Samsung, which uses Google Inc. ’s free Android software on its smartphones, has based its success on three pillars: It offers compelling smartphone models at all price points; has an enormous marketing budget, and has increased global distribution.
But “what differentiates Samsung from almost all other Android players, and most other rivals in other areas, is speed and urgency. When Samsung really chases down a market, it chases harder than almost any other company that I know of,” Mr. Mawston said.
“The best example of that is in the touch-screen phone segment. When Apple launched the iPhone in 2007 … Samsung was one of the first major players to react with a competitive portfolio.”
The long-term strategy, Mr. Mawston said, is for Samsung to use smartphone success to lend a “positive halo” to its tablet, laptop computer and television units – and then capture consumers and businesses within Samsung’s various services, including cloud computing.
Still, the mobile sector’s cyclical history shows that domination by any one player is transient.
“If you look at Samsung two or three years ago, they looked dead in smartphones. A couple of hits on Android later, and they’re back in the game. And now, they’re on top of the hill,” Mr. Mawston said.
“[Companies such as]RIM are right in the eye of the storm right now, and it’s hard to see any other direction but down for them at the moment,” he said. “But history shows that things can turn around quickly. If RIM could just produce one or two killer products … RIM could quickly be back in the game.”Report Typo/Error