Strategy Analytics announced that their research indicates Samsung has ousted Nokia as the world’s biggest mobile phone manufacturer. It was as far back as 1998 that Nokia had toppled Motorola for the number one spot, and now in the first quarter of 2012 Samsung has done it to Nokia, 93 million units to 83 million.
As if this weren’t enough, Samsung raked in its biggest profits in the past 4 years. Imagine, $4.5 billion as of March 31, 81% above last year. Not that it’s any consolation, but Samsung also holds the top world ranking for TV’s and flat screens.
Samsung admits that they expect their earnings to continue exponentially with the same momentum it is currently showing, since they have the competitive advantage. This comes from Robert Yi, Samsung’s head of investor relations.
The mobile communications division alone raked in operating profits of 4.27 trillion (Korean Won) during the quarter. Revenues leaped 86% from the previous year.
May 3rd is Samsung’s big day to show off to the world its newest form of the Galaxy phones. This line of product is responsible for Samsung’s victory over Apple as the world’s largest smartphone seller. In fact, it can be said that there are but two smartphones in the world today, Samsung and Apple.
The May 3rd release of the Galaxy S3 will provide continued growth to Samsung’s mobile communications division. IDC, the research firm, claims smartphone sales will increase 33% across 2012, up to 659.8 million phones.
As the top dog, analysts believe Samsung will benefit most from this surge in smartphone sales, sending its market shares even higher. However, the competition will also benefit and seek to introduce their own new products to capture whatever Samsung has gained. Just consider what the likes of Apple in the US, Nokia in Finland, or HTC in Taiwan might do to gain a bigger portion.
Although Apple just sold 35 million iPhones to kick off 2012, it will release yet another iPhone later this year. Analysts are hoping that with the stiff competition, slashes in prices will follow, but that would cut into their profit margins. However, that is unlikely to happen as long as the market is still growing so fast. Once the growth of the smartphone market as a whole comes to a slowdown, then the smartphone manufacturers will have to compete more aggressively through price reductions.
Even the analysis that with the launch of the iPhone 5 in late 2012, Samsung might see their earnings weaken, is unstable. The market is growing fast enough to remain volatile with regards to who grabs how much of the market.
On the downside for Samsung their chip manufacturing has been impacted negatively by the slump in PC demand. They can thank their lucky stars for the success of their smartphones, since it has offset the failing chip manufacturing division. Their big success in the PC industry has been their DRAM chips. They are the world’s largest manufacturer of RAM. The switch to tablets, away from PCs, has led to a decline in RAM sales, since tablets use flash memory chips. The plummeting prices have nearly crippled the RAM sector.
Samsung experienced a 54% slip in the first quarter of 2012 in their memory-chip division, compared to last year.