Sure they have, and as long as we count parts and phones, rather than revenues, or better yet, profits, they will always be "bigger" than Apple, in that sense.
I have a feeling they'd rather be more profitable though.
Comparing "Samsung profits" to Apple's profits is meaningless - Samsung is not a single entity but a group of 83 interlocked companies (chaebol) which is largely controlled by the founder's decedents.
As a matter of scale and impact, Samsung accounts for 13% of South Korea's GDP.
As a consumer, I think I'd rather buy from the guy that's, yes, profitable, so they don't disappear, but not the one that's making quite so huge margins on the stuff they sell me.
You'd rather pay $100 for a flash drive to the guy that only makes 10% on them because of his low volume or bad logistics, than pay $80 for the flash drive to the guy that makes 50% margin because he's the high volume buyer and has great logistics?
Me, I'd rather pay less for the best, and if that guy has better margins, so much the better.
What if the guy that makes 10% on them doesn't earn more because his drives are made to last longer and he provides better working condition in his factories? Not saying that Samsung is like that, but there are plenty of reason beyond volume and logistics to justify different margins.
As ramchip says below, there are a zillion reasons why high margins may happen, including some that are "good", and some that are "bad". All other things being mostly equal, I'd go for the guy who's not making as much money off of me, because that means that more of the value is accruing to me, rather than to him. Simple as that.
You're assuming that the cost of goods sold (the price minus the margin) is a reliable indicator of the value you receive in the final product. That's a really questionable assumption given that the whole idea of company that converts raw goods into finished consumer products is to maximize the amount of value they add onto the raw cost of making the item.
You're basically saying you prefer to buy from the company that adds relatively little value to its products in the form of good design, efficient production or good sourcing of raw materials.
Let's say a company found a way to create goods with negative raw goods costs - such operations do exist, usually by converting trash or waste into a desireable product. (E.g. sewage into fertilizer pellets.) Is that a less desirable product than one that has a lower margin?
This seems a bit backwards. The price and hence profit that the guy can sell you his widgets for is set largely by how much you (on average) are willing to pay for the value his widget brings you.
Saying, hypothetically, "All other things being mostly equal" isn't really useful here I don't think. It's saying: 'assume the iPhone and SGSII generally represent the same value to people' clearly for a large portion of the people, they don't.
I was expecting this. Apple can't possibly match Samsung with all their smartphone price ranges, and it's only the beginning for Samsung. There are a lot more "units" to be sold in the under $150 level. That's where the biggest volume will come from.
I also expect them to surpass Nokia in all phone shipments, too (they already did in smartphones). But it might take a few more quarters. Nokia will transition too slowly to Windows Phone and Meltemi, and it's yet to be seen if they will even see as big success as they did in the past with Symbian. Many have already moved on from Nokia.
There are other factors that did give Samsung an advantage such as no new iPhone launched by Apple this quarter. It remains to be seen what the impact is of new iPhone, Sprint availability and a 3GS that is free with a contract. Apple is predicting that they will generate $40 billion during the next quarter.
With a 'free' 3GS Apple is pretty much competing with Samsung and Android now at every price point.
Apple might win the next quarter, because of the launch boost of iPhone 4S, but it will be their last one. After that it's all Samsung all the way. And no, Apple isn't competing with the Android manufacturers on every price point. This is a common American fallacy, thinking that the contract price is all that matters, and that it's the real price of the phone.
But an iPhone 3GS still costs around $400, while Android manufacturers can make even $100 phones today. What this means is that the iPhone 3GS will still be sold on an expensive contract, while the "free" Android phones will be even on $10 contracts.
On the other hand, keeping the 3GS on the market will mean new iOS versions have to remain compatible with it and it will also mean further fragmentation of the platform (hardware capabilities and resolution).
So it will cost them something. Competition is a bitch.
I agree. It's interesting info to know, but not something to get worked up about. MG Siegler seems to take pride in Apple making a lot of money, for example. I'm really unclear why I should get excited if Apple make $30B this year or $25B unless I'm a shareholder.
Well heck, I am an Apple shareholder, but still don't particularly care whether Apple happens to sell more phones than any other individual company, as long as they're still selling plenty of phones and making plenty of money.
I mean, I'd prefer 'em to be making more money rather than less money, but it's not a great idea to get too emotionally invested in every piece of news about every company you happen to have some money in.
I guess this is just a way of confirming your choice with so many out there. This is similar to the Google+ and Facebook buzz that was there a some time ago.
Also, people want their favorite companies to be pitted against their closest competitor and when they emerge victorious, they have a sense of pride about it.
To end, this is very similar to the emacs vs vim or windows vs linux vs mac or the browser competition where people just want to establish their some kind of superiority over the others.
Single device strategy vs Devices with multiple sizes, keyboards etc.The first strategy makes good profit and the second strategy makes more revenuue. but long term, always the market share rules strategically..
It's clear that very small market share is not sustainable, but the market is so large that I think iOS will be fine even if it levels off at ~30% share.
that is totally false; I (comscore, nielsen) observe that android came from 1% to near 50% of all sales globally in 2 years despite the media buzz around ip. most of my friends are disappointed by over promised, not met expectations of ip5 and they are moving to large screen android phones. sgs2 and sgn are clear winners as well as htc.
These figures are a red herring, I'd like to know how the iPhone-equivalent models from Samsung/others are selling. The 3GS is available on upfront $0, but the plan cost is higher, which means it's not competitive to the much cheaper, albeit less-featured/powered models from other vendors. In essence this is apple replicating their 90%+ marketshare in computers over USD$1000.
As an app developer I'm more interested in how this top end pans out. I want the consumers who are willing to buy apps, and I want there to be lots of them on one kind of platform so I don't have to do the heavy lifting in making the game consistent across all handsets. I'm not making angry-birds clones that could run on minecraft redstone, so a basic level of GPU+CPU capability is needed.
Samsung's business model promotes the further fragmentation of Android, and I think this will be a bad thing for consumers(read: developers). We'll be back to the days of nokia making a different phone for every conceivable type of person there is, with only nokia or huge studios with the capability to make the umpteen variations required to make the game feel at least comparable across each handset.
If there are 80% of the market using android devices that are underpowered the only winner will be flashlight apps.
That's because Samsung has a wider view of "smartphone". They release a LOT of Bada phones which they consider to be "smart", but often only mention their Android partnership when they release their numbers.
Can anyone find Samsung's actual sales numbers? Not analysts estimates or vague percentages more. I would think if Samsung is selling as much as is claimed, they would have at least a concrete number.
... and so the pressure builds on Apple to diversify, which is what killed it last time. Really Apple needs to invent and come up with something special, but as SJ would tell you - which idea do you pick?
Does it? It may not ship the units that Samsung ships but it makes far more money off the smaller number of units it does sell.
The reality is that Apple were the largest smartphone manufacturer in the world for one quarter. It would be more accurate to view the fact that they were (briefly) number one as a blip rather than see it as a major title they lost and something they need to react to.
That seems to show total profit of Apple from Q2 of 2011. See http://www.apple.com/pr/library/2011/04/20Apple-Reports-Seco... "The Company posted record second quarter revenue of $24.67 billion and record second quarter net profit of $5.99 billion" and compare that number to the latter graph on the page you posted.
Or am I reading this wrong? I know nothing about finances, so it very well might be that case that I just don't understand what I read.
So, again, how much does Apple and Samsung make money from mobile phones?
What nearly killed Apple last time was a bad supply chain that resulted in ridiculously expensive desktops full of non-commodity parts. This time they're actually equipped to compete with efficient manufacturers, which is why their dystopian policies worry me now.
Killed it last time? sooo it had nothing to do with Microsoft , Windows 95, and the arrival of the internet?
The 90s house hold computing boom left Apple completely out of the equation, the couldn't compete on any level. Jobs turned that around by competiting where MS couldn't, with hardware and usability (through lock in).
in what way is the pressure building? they are still very successful, and i don't see anything to indicate that their current strategy won't remain successful for a long time to come.
It really worries me that there's a new breed of Apple fan that actually believes this.
In reality they set out to build the best device (for affluent, white, middle-aged, American males with a taste for minimalism) and semi-accidentally became fashionable status symbols.
The crowing about making the most money was just fanboy bragging because every other stat they bragged about was slowly being eclipsed by Android. Fanboy rule number one is to make far too big a deal about anything unique about you or your enemy. Some people seem to have latched onto profit margins and run wild with it. This has gotten to the point where I'm half expecting, even here on HN, someone to come along and claim that Samsung "isn't making any money" from selling these phones.
And this suggests that "Demographically, Android phones are especially common among young adults and African-Americans, while iPhones and Blackberry devices are most prevalent among college graduates and the financially well-off."
Blackberry seems to win, probably through being an early provider of group messaging to a young, early-adopter demographic on one side and a business staple on the other and the twin lock-ins that provides.
Though note that "white people" are about 10-15 years older than other categories on average so white, middle-aged, and affluent kind of go together and can be hard to tease apart.
If all the 'Think Different' ads, the product differentiation by Apple, and the Jony Ive's memorial speech about caring about months for things that the user will never see, with no regards to its contribution to profit, cannot convince the downvoters that Apple is not like all other run the mill companies, then I don't know what will.
Regardless I hate it when people act and support the cynicism that all companies are the same, they all work for profit, there can never be a do no evil company. May all such thinkers stick to their dogma lifelong and suffer from it.
You don't come up with nearly a hundred billion dollars in cash sitting around because you only aimed ay making the best product. They aimed for the best product so as to make the most money. They used marketing to exploit the market place for those whom are easily convinced than items give them status.
How more simple could their model be? Exploit human greed.
To be honest, I'm not an Apple fan. I'm a fan of the iPhone; I think it's a superb bit of kit. But I waited 4 years to upgrade my last one, so I'm probably not exactly their best customer.
I don't really see the problem with claiming a company sets out to make money. But Apple's achievement in this area is nothing short of phenomenal. They've driven component costs down to the point that there's _hundreds_ of dollars of margin on every device. Then they've got the app store. The only firm I can think that does it this well is Nintendo, who even in the days they weren't fashionable were nonetheless very profitable.
From the standpoint of operations and supply chain, Apple's work is absolute genius. People who keep up with successful businesses and study business strategies should marvel at this. HN is full of people who care about the running of business, so this is a natural topic.
But the drift amongst consumers in general from discussing things like "Apple makes great phones!" and "Android phones really empower me to do things I find useful!" to arguing your phone is superior to someone else's because of the supply chain management involved or the profit margin is utterly baffling. These things have no bearing on the consumer experience.
Even the sales stats are ultimately a pretty silly thing to argue about. If you have a device with the limited ecosystem of a WebOS phone, then market share matters, because at that level, not many people will write apps for your phone. But both iOS and Android phones are tremendously successful, and both have pretty much all the third party apps anyone needs (plus or minus something new enough that it hasn't been ported or knocked off on the other platform).
I like a lot of things about Apple, and I've bought a lot of their products and often recommended them to friends (still do, only recently bought my parents an iPad).
I can honestly say that their profits have never been something I've been impressed by, and indeed, for most of that time they didn't have impressive profits, so if I was impressed by profits I would have bought and recommended Windows PCs instead.
Surely it's equal parts of both: Apple try to make the best products (in order to) make the most money (in order to) make the best products (in order to) make the most money (in order to) make the best products (in order to) etc etc...
In the sandpit where Apple plays, you can't have one without the other. A beautiful symbiosis of business and craft.
It would be nice if that were true, but actually network effects and path dependency mean that the best products will rarely "win" in IT markets where those factors dominate (see arguments about who has the bigger app store, or developer base, or patent portfolio, or pile of money).
I hope people don't lose their sense of surprise that Apple is "winning" with nice products or start to think it's inevitable, history tells us otherwise.
I guess the beef is that the metric keeps changing. Before Android took over the market crown it was all about unit sales and marketshare percentage that everyone touted. Once Android took over, the metric changed.
For example, Windows Server makes billions per quarter and probably is the Server OS that makes the most money for it's maker. But you won't find that argument on HN to say that Windows Server dominates the server OS market. In fact some believe that Windows has no viable presence in servers.
Before Android took over the market crown, RIM held the market crown.
Sure MS might not have a viable presence in servers, but if they are making more money doing it than anyone else... by definition, they are winning. They aren't going to pack-up a billion-dollar-per-quarter sector of their company because they don't have the market share numbers they'd like. If anything, having such a successful business with such a small market share represents potential growth.
Well, Apple fans really did set the stage for these sort of comparisons with all the hand waving about how the iPhone would be the only smart phone in the future. And their continuous need to point out market share numbers in their Internet "my favorite company can beat up your favorite company" fights.
I can't believe that Gruber (for example) would claim with a straight face "Money is how you keep score" after years of attacking Microsoft who massively won on both marketshare and profitshare on the desktop. (They've fallen slightly behind in profit the last year or so, but take any longer period and they murder Apple. By Gruber's own metric this means Apple's computers sucked, and in that case why should we be excited about their phone?)
This is true but it's something both sides are guilty of.
The most vocal Android proponent I know carps on about market share incessantly as a measure of it's superiority despite having spent the best part of two decades reacting to Window's dominance with the old "eat shit, a billion flies can't be wrong".
The truth is that both sides have some interesting challenges ahead.
Google have just bought a device maker (who just posted a significant loss) which could very realistically harm it's relationships with other manufactures (including Samsung). Meanwhile Samsung - the best Android phone manufacturer right now - are also now signed up to provide Windows Phones and are investing in Bada. And pretty much all Android phone manufacturers are operating on pretty thin margins because of the competition.
Plus Kindle and others are starting to fragment what Android means - are app developers going to be held back by having to keep things running on the far older Fire version if they want to access what is likely to be a massive market? Oh, and those pesky little patents suits aren't going anywhere in a hurry and are likely to be, at the very least, expensive. On the upside it now has a mass market advantage and a lot of people betting on it.
Meanwhile Apple's previous unrivalled dominance in terms of product quality has significantly eroded (if not disappeared altogether) and it's iPod -> iPhone upgrade path is dropping away as the iPod ceases to be a big seller (though the Mac is now becoming mass market which at the very least boosts the Apple brand and awareness).
The iPad is still the undisputed king of tablets but that's likely to at the very least come under more sustained pressure than it has so far as further iterations of Android tablets improve. Plus the potential for a post-Jobs psychological hit exists and, those patent suits aren't just running one way.
And both of them are going to be threatened by Nokia and MS getting their shit together with a couple of nice looking phones, a billion dollar marketing budget and a shed load of brand recognition in the mass market space.
Bottom line - I don't think anyone should carp right now, this thing is a long way from playing out.
Your post is all very reasonable, but do you not realise that this quote ...
"And pretty much all Android phone manufacturers are operating on pretty thin margins because of the competition."
... simply isn't true, and the only reason you think that is because it has become an accepted truth in the Apple echo-chamber? (Mostly by intentionally fudging between mobile phone and smartphone numbers depending on whichever makes Apple sound better).
Morotola Mobility just posted another loss in the last few days, LG have been losing money for 2 years now with no sign of turning it round. HTC margins are "disappointing" and their share price has dropped considerably in the last few months in large part because of the competition in the market (source: http://www.marketwatch.com/story/htc-profit-up-68-on-demand-...). HTC are making good profits but their margins aren't great.
Samsung are doing well but I'm not seeing anyone else wooping it up but I'd love to see anything that contradicts that (I own no Apple stock and I'm really not that vested one way or the other).
From eyeballing that chart it appears he's counting the whole of Apple's profits towards that graph despite the title being "Operating Profit from Mobile Phones".
I don't consider Asymco an independant source, indeed, they are a key part of the Apple echo-chamber that created this myth. (I mean what kind of pseudo- mobile-phone market analyst gets everything about Android, Symbian and Windows Phone wrong? He even fluffed the iPhone numbers last time, so he's not even a one-trick-pony).
> From eyeballing that chart it appears he's counting the whole of Apple's profits towards that graph despite the title being "Operating Profit from Mobile Phones".
I think you need to look closer. While Apple don't break profit data down by product line (I don't believe) he's not that cack handed. If you read through the comments you'd see that he won't use the Samsung telecoms unit figures as these are meaningless in this context so it seems unlikely that he'd use an even more crass approximation for Apple (and this can be confirmed by checking the number he uses against the number Apple publish - they're not the same. If you wish to confirm this remember Apple's Q2 is not calendar Q2).
> I don't consider Asymco an independant source [...]
You may not like his views but he shows data, he shows his working, he answers questions in the comments and on twitter about why he's done something a certain way. Hell, when he messes up public predictions he even rakes over his own errors publicly in more detail than anyone else would.
In the face of this level of openness simply saying you don't consider him an independent source isn't a good argument if you don't show that his data or working is wrong, or provide contrary evidence.
Please show some numbers that show that right now someone other than Samsung is getting anything close to Apple level profit margins on handsets.
> Mostly by intentionally fudging between mobile phone and
> smartphone numbers depending on whichever makes Apple
> sound better)
I am especially interested in examples to illustrate this your point. Some dumb phone manufacturer has higher margins than Apple with iPhone and Apple chooses to ignore that?
From all reports it is true. Apple has the highest margins in the industry. People may not like Apple or it's products, but their business savvy cannot be questioned. Locking in certain manufacturing lines for years has made it near impossible for their competitors to compete and still make any money.
That's completely wrong. Yes, money is how you keep score. But no, just because Microsoft had a higher "score" (protip: microsoft won) doesn't mean that Apple's computers suck.
Gruber is not saying that Apple makes more money than X, therefore X sucks. He is saying Apple makes more many than X, therefore Apple is winning.
No one has ever claimed that Apple won the PC war.
I think you're mistaken. There have been around 40 million iPads sold, whereas Windows 7 alone has sold over 400 million copies (released a few months before the iPad). iPad surpassing PC sales would be a heck of an achievement.
However, if these trends continue in the longer term Apple could start to suffer from some of the same negative network effects that plagued them in the PC era. If their market share slips too far people will start perceiving them again as a niche, luxury brand too different from what their friends and family use.
"When Steve Jobs introduced the iPhone to the world in 2007, he mentioned that Apple had set a goal for itself to reach one percent of the mobile phone market share."
Samsung smartphones are selling briskly, there is no material difference in the numbers.
The month on month rise in sales, for the last year or so, has been spectacular. You can't just keep shipping phones at that pace without selling them, it's simply not realistic to channel stuff on that scale.
The article didn't mention anything about the difference in "shipped" vs "sold" numbers. Apple's numbers are those that have sold through to customers. So there is not enough information to tell if it's "a material difference".
The rest of the article is equally shoddy. For example:
Chinese phone maker ZTE Corp.’s cheaper handsets helped it take 4.7 percent and overtake Apple for fourth place. Global market shipments climbed 14 percent to 390 million units, according to the researcher.
Apple does not even produce feature phones, so the inclusion of Apple in that paragraph can only be construed as mischievous. It's like saying "Porsche fell to last place in the under-US$20K category".
The secret of samsung is that they cater for multiple price ranges, also the use of android is proving to be a good advantage over the now dying nokia.Despite the launch of the lumia, nokia and microsoft aren't likely to win in this race.
Do you have figures to share? You seem confident, yet I'm equally confident that their profits from smartphones are large and growing quickly.
It's seems unlikely that they would be doing so differently from HTC and ZTE, much smaller players who are doing very well.
I don't know of any comprehensive numbers on the market that I'd trust, but as a snapshot Apple reported $7.3 Billion profit in July (for phones, ipods, ipads + compters etc.) up 80% from last year, while Samsung just announced $2.3 Billion just from smartphones, a yearly increase of over 100%. (This doesn't seem to include money from selling components to other smartphone makers, such as Apple).
Your graph appears to show Samsung overtaking RIM and Nokia in profits and moving into second place as its smartphone marketshare grows to be the largest (it overtook them both in marketshare during the last year).
Do you think that supports your point or mine? As a reminder my point was that "I'm equally confident that their profits from smartphones are large and growing quickly".
(The bubbles' seem to paint the same picture in a more dynamic way, with Apple, Samsung and HTC rising strongly over the last year though it ends at June.)
I'm a bit confused about Apple's profit being "6" according to the bubble thing in June and it being $7.5 Billion for their entire product line the next quarter. I guess that's not just smartphones then (edit: yep, confirmed it's all products combined).
Samsung is indisputably more "tyrannical" than Apple. The corporation has unsurpassed political influence in South Korea. For instance, scumbag Chairman (former CEO) Lee Kun-Hee is a nepotist and admitted guilt to political bribery in 2008. Guess what? He paid his way out of jail time and was even pardoned by LMB in 2009.
Samsung also has tremendous media influence in the nation. The company influences the media by giving or withdrawing advertising, giving scholarships to journalists, or suing the critical media. As a result, their corporate misdeeds get swept under the rug. The company uses the press as a means to control the press rather than sell their products. Samsung accounts for almost one-fifth of the entire nation's GDP. It's no surprise they are the nation's largest advertiser.
Corporate influence in the USA is nothing compared to the influence of the chaebol in Korea.
As anti-capitalist, I oppose all corporations, including Samsung. On the other hand, as a free software activist, Apple has made itself my number one enemy in the past year or so with the considerable spread of the DRM-ridden iOS.
I similarly can't understand how Microsoft is dying in the post-PC world that we are supposed to be living in, but somehow trying to kill Linux by requiring secure boot on it's PCs(which no one is supposed to be buying anymore).
Well, in that case you would say that Microsoft is trying to survive by eliminating competition on scarce resources. But then, I don't think Microsoft is dying.
Last I checked I get to decide my own personal beliefs. I love technology, including hardware such as televisions and tablets, and free software based upon GNU/Linux and web standards, which are both things Google actively contributes to.
I am anti-capitalist precisely because of my love of technology. I believe that we can construct a social system which vastly improves our rate of technological progress and that won't hold it back with things like the AI winter. I believe that subsequent to developing our technological productive forces, we will have a post-scarcity resource supply that makes money obsolete because our technologies will produce everything everyone needs.
My problem is that all of these articles are missing a key piece of information: the number of devices each manufacturer has out on the market. Jumping over to Samsung's website, I count 14 Galaxy Smartphone devices currently on sale. What about Apple? They have on sale the iPhone 3GS, iPhone 4 and iPhone 4S. How about instead of comparing absolute values of shipments, we talk about number of shipments per device?
But is it really a numbers game? Is it quantity over quality? It's no secret that Apple has one of the most loyal fanbases out of any other tech company. Who is clamoring over wanting every new Galaxy smartphone? Who's lining up every time they release a new product?
For those who want to play the numbers game, make sure to play it properly. The iPhone 4s sold 4M shipments during its first weekend. Meanwhile, it took Samsung 55 days to sell 3 million Galaxy S IIs, arguably, their most successful Smartphone yet. Now if Samsung continuously releases new versions of these Galaxy smartphones, which they are, then obviously they will be shipping more.
http://www.economist.com/node/21525685
Samsung have for a long time been a bigger player in the smartphone market than they look from their device sales alone.