Annual iPhone cycle helped Samsung destroy Apple in Q2 smartphone sales

By , Jul 27, 2012

It appears Samsung is creeping up on Apple slowly but surely. Not content with overtaking Apple and Nokia as the world’s largest smartphone and cell phone vendor, respectively, Samsung during the June quarter managed to widen its lead by selling twice as much smartphones as Apple.

Driven by the surprisingly strong start of its latest flagship handset, the Galaxy S III, Samsung has managed to increase its worldwide smartphone share while Apple slid. Man, Apple really needs to refresh the iPhone twice a year because this annual update cycle is becoming the company’s Achilles’ heel…

Apple reported sales of 26 million iPhones during the June quarter, missing estimates by three million units as more and more people hold off upgrading until the next iPhone arrives in September or October.

Samsung stopped divulging smartphone and tablet numbers last summer for competitive reasons so we have to rely on estimates. Also, Samsung’s numbers are shipments while Apple’s numbers are sell through.

According to research firm IDC, Apple’s worldwide smartphone share slid from 18.8 percent in the year-ago quarter to 16.9 percent in Q2 2012. Though the iPhone grew 27.5 percent year-over-year, global smartphone shipments surged at a faster 42 percent clip.

During the same period, Samsung nearly doubled its global smartphone share, having surged from 17 percent to a whopping 32.6 percent based on estimated sales of 50.2 million smartphones, up 172.8 percent year-over-year.

An estimated Galaxy S III sales this quarter were 6.8 million units.

Here’s your table, courtesy of IDC.

IDC explains Samsung’s ‘shotgun’ strategy:

Samsung employs a ‘shotgun’ strategy wherein many models are created that cover a wide range of market segments. Apple, in contrast, offers a small number of high-profile models.

While both companies have expanded their geographic presence in pursuit of market share, the two companies will inevitably come into greater conflict as both try to generate additional gains.

If you need another proof that Samsung is eating into iPhone sales, here it is.

IDC’s numbers mirror figures from Juniper Research, which noted that Apple needs to make a bigger iPhone and create something new of Siri’s magnitude to compete successfully with huge Samsung handsets like the S III.

Another interesting thing happened as well.

Samsung reported Q2 operating profit of $5.9 billion and $4.6 billion in net profit, or half of Apple’s $8.8 billion Q2 net profit which includes Macs, iPhones, iPods, iPads and other products.

Put together, Apple and Samsung together account for more than half of smartphone sales globally and as much as 80 percent of cell phone industry’s profits.

Considering as much as 60 percent of Samsung’s profits come from smartphones and smartphone-related components, Samsung is pretty much a Galaxy company.

Likewise, Apple is now an iPhone company as nearly 60 percent of its profits now come from the iPhone and related products and services.

You may find it unsettling that Samsung has rapidly overtaken both Apple and Nokia to become the world’s largest smartphone maker.

It appears Apple’s annual refresh cycle has finally come to bite the company in the you-know-what. iPhone shipment volume is traditionally highest in the first two quarters after its release, but this time Apple saw a quarter-over-quarter decline just six months after its latest iPhone unveiling.

Furthermore, Samsung gets to report one more quarter of monster sales as the next iPhone won’t land before fall. If Samsung manages to sell 15 million S III phones during the current quarter, as projected, that’s an additional $7 billion in sales increase.

Perhaps Apple needs to step up its game by having two iPhone hardware refreshes a year, one for a major model introduction, followed by a minor hardware and/or cosmetic bump up six months later.

In other words, compress the iPhone 5/5S unveilings in one year instead of two?

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  • billypuntove

    Two refreshes at year from Apple would be a joke. They would be less and less anticipation each time, which we all know drives Apple sales like crazy.

    They just dropped the ball with the addition 4S instead of introducing an iPhone 5.I’m not saying they should have name the 4S the iPhone 5 because it had only minor changes in addition of Siri. But it certainly hurt their sales, as many of people who would not hesitate to buy the next generation didn’t get the 4S (having the 4) because of this lack of new features.

    • Syed Ali

      Points well made! Not liking finding myself disagreeing with 99% of everything this sites bloggers are saying lol

    • http://twitter.com/rlmeena Roshan

      I also don’t think refreshing iphone twice a year will boost iphone sales significantly. Because of iphone prices and phone upgrade charges from carriers, most of the iphone owners will not be able to upgrade. So what is the point.

      Plus I think they should offer carrier unlocked phones like s3 or nexus at lower prices so users are not stuck with a shity plan from a carrier.

  • http://twitter.com/oo7plasma Brandon

    Android has new devices coming out every 3 weeks it seems, im not exactly surprised that the s3 is winning in sales

  • chjode

    I don’t think Apple can refresh the iPhone multiple times each year unless they introduce a non-competing product. I think the better plan is to clearly define a big product launch each quarter. Something like iPhones in Sept/Oct, iPads in Feb/March, new Macs or iPad mini in May/June. That sort of schedule will give Apple a flagship product each quarter to brag about and upon which they can focus their advertising.

  • http://www.facebook.com/profile.php?id=1849765376 Jordan Rushing

    In other news: Apple’s annual iPhone completely devastates Samsung in general.

  • http://www.facebook.com/Dennispr Dennis G Hernandez

    people don’t mention how many handset samsung have out there selling when apple have 3 running iOS. The iPhone(26m), iPad(17m) and iPod(9m) (millions) iOS devices 3 = 52m. A number that apple i am sure they like

    • goofygreek

      If you wanna get technical, apple has 3 iPhones they are currently selling. iPhone 3GS, iPhone 4, and 4s. Unless they stopped the 3GS, then they are selling 3 phones.

      • http://www.facebook.com/Dennispr Dennis G Hernandez

        they are counted on the 26m thats including all the iphone in total.

  • @dongiuj

    I’m no marketing/sales person but personally i think as long as apple make better software improvements to the phones during the year instead of crap ones then this could help a bit.

    • Falk M.

      I agree, a .5 release after half a year with new features would help.
      It’s mostly software that you face limiting or enabling you.

    • Pedrogamer

      Agreed. Like theming.

  • Pedrogamer

    iPhone 4s has dual core a4 chip? Woah! Talk about loss of credibility in this article. I’m no apple fan boy but let’s get our facts straight. This is what happens when everyone becomes a know it all blogger, the quality of these reports are poor and watered down.

    Where’s the comparison of battery life? Or how about the fact that Samsung needs 1gb ram and quad core chip to do the same thing the iPhone can do. iPhone is heavier? Quality glass and metal comes at a weight price. Is Samsung made of the same materials or is it plastic? Sharper edge? I find the “tapered corners” on the iPhone much better to hold on to and less likely to slip out of my hands or drop.

    • goofygreek

      The s3 does not need a quad core to do what the iPhone can do. The us version of the s3 is a dual core, granted it comes with 2gb ram to really help with multitasking. But as far as software goes, I am running the s3’s touch wiz interface on my s2 just fine with no hiccups. And my s2 is a dual core with 1gb memory.

      • Pedrogamer

        You kind of proved my point. I was merely suggesting what that iPhone can do with 512mb ram and 800mhz dual core.

  • Pedrogamer

    I’d also like to add that Apple should not update twice a year. That would have the iPhone lose excitement. What I think would help is not let it be so known when the next iPhone will be released so there’s no anticipation for it and therefore may help curb some of those customers who are choosing to wait for the next phone to be released.

  • http://twitter.com/HuchongLing Joey_Z

    Apple might not gain any additional sales by refreshing twice a year, or even a major change per year. But a greater chance of pissing off customers who bought the “old” phone. I don’t think Apple fans are all irrational. Apple just can’t let everybody upgrade their phones every 6 months.

    Also, phones may cannibalize each other, which is a bad thing to recover from more R&D costs. and, apple will need to split their energy into two phones which may end up with two average phones rather than one high quality phone.

    Just don’t forget the Moore’s Law, there’s really no point of making a major update for less than two years. You will have to wait for the hardware to catch up anyway.

  • http://www.facebook.com/profile.php?id=100003072559308 Siła Hasła

    “Samsung stopped divulging smartphone and tablet numbers last summer for competitive reasons so we have to rely on estimates. Also, Samsung’s numbers are shipments while Apple’s numbers are sell through.” I like this sentence so much that I saved it. Some bloggers seems to not understand it.

    • Aric Bolf

      Shipments mean jack. If each store orders 100 units to get stocked up, but only sell 10, how does shipments mean anything? Especially since its a new product.

      • @dongiuj

        Where are the phones being shipped to?

    • Pedrogamer

      I love what I’m heating I mean reading

  • http://www.facebook.com/cngaunt Chris Gaunt

    Does anyone else find the S3 very iPhone’esque in design? (and I mean the physical aspect of the phone)

    • Pedrogamer

      I do.

  • http://twitter.com/AfricAZN Etienne Mboumba

    Samsung has about a dozen differet galaxy models. And 95% of them are low end android devices. The average customer will for go for the cheapest. Of course samsung sells more. I sell 10 galaxy Ws for 1 galaxy s3.