Should Apple Worry About Samsung's Widening Lead?
Jul 27, 2012 5:00 AM PT
Thus far, the race between Apple and Samsung for title of top global smartphone provider has been a neck-to-neck affair with one company or the other occasionally receiving a boost from an analyst firm declaring that yes, Apple or yes, Samsung was in the lead.
It has happened again. This time the report is from Juniper Research, and the word is not only that Samsung taken a lead in the smartphone market in terms of unit shipments, but also that it's a sizeable one.
In the second quarter of 2012, Samsung shipped 52.1 million smartphones, just over double the number shipped by Apple -- that is, 26 million, Juniper estimated.
Samsung has also doubled its lead over Apple quarter-on-quarter, the firm said, thanks to its flagship Galaxy S3. That device alone posted sales of 10 million in June.
To be sure, Apple is feeling the impact of the "waiting for the iPhone 5" phenomenon. As its recent quarterly earnings showed, it moved fewer of its handsets than analysts had expected, causing speculation and even hand-wringing about the company's direction.
Not a Completely Fair Comparison
None of this is entirely fair to Apple, though, Azita Arvani of the Arvani Group told MacNewsWorld. For starters, projections of unit sales are hard to make -- yet analysts treat such expectations as though they should be carved in stone.
Comparing Apple's shipments to Samsung's is not a totally balanced exercise either, she said.
"Samsung has quite a lot of different models of smartphones, where Apple has a few versions of the iPhone," she said. "So, a more equitable comparison would be to compare the Samsung's Galaxy S line only with Apple's iPhone line."
If you were to ask Apple, it would probably say that it only cares about putting the best product out there and cares less about filling the market with lots of different models, Arvani added.
Finally there is this: Samsung's numbers have not come out yet for the quarter, but they are due shortly. Arvani is betting that they will show Apple is earning more profits than Samsung from its smartphones.
Fixation With Unit Shipments
Why is the focus on unit shipments so important, anyway? wondered John Jackson, vice president of research for CCS Insight.
"The industry has this fixation with unit shipments, and it is not an invalid fixation -- but in the end, this is really a game about value," he told MacNewsWorld. "Ultimately, the winners will be determined by platform strategy. So, unit volume share is a component to measure a company's success but not the whole picture."
Platform vs. Hardware
Apple, like Google, is fundamentally a platform company, Jackson said. "When we think about Apple, we think about an integrated model -- it cares about volume, but volume is secondary to value creation."
Samsung isn't there yet, he said, but it is clearly positioning itself to become one. The company is acutely aware that hardware alone doesn't win the smartphone battle -- one only has to look at RIM to understand that.
Right now, Samsung is playing what Jackson called a "channel chess game" as it moves to platform status.
"It is extending the Galaxy line up and down price points to keep competition at bay. They are also controlling big chunks of the supply chain."
Good for the Market
All of this competition is good for the market, Arvani said.
"It is good to see that Samsung has become a strong smartphone vendor," she emphasized. "Having fierce competition in the market place is beneficial for the consumer, and it encourages more innovation among all the vendors."
Apple and Samsung did not respond to our requests to comment for this story.