“Just chalk it up to marketing.” That’s how a lot of pundits have explained Apple’s success over the years, indicating that the company devotes a lot of its resources to, and greatly depends on, marketing to sell products.

But according to a new report from Asymco analyst Horace Dediu, Apple spends far less on marketing than the competition does. In fact, when it comes to these kinds of expenses, Samsung spends more than anyone…

Taking a look at Samsung’s operating profits over the past few years, Dediu discovered that its margins are roughly 17%. That means that out of each handset it sells, Samsung only pockets about 17% of what it sells it for.

“One could argue however that a 17% operating margin from a group that is now leading in volume and price is still a bit weak. At its peak Nokia enjoyed a 25% operating margin, RIM 30% and HTC 27%. Apple’s iPhone operating margin is around 45%.

I think a large part of the margin story is a relatively high level of spending on SG&A (Sales, General and Administrative) which includes advertising, sales promotion and commissions. In the case of Samsung Electronics, as sales has grown these expenses have grown in proportion. As a percent of sales SG&A have held relatively steady at around 17%.”

The Asymco analyst attributes a large part of Samsung’s low margins to its high SG&A expenses, which, as he states above, includes advertising, sales promotion and commissions. And a majority of that pertains to cell phones.

So one of the more remarkable aspects of Samsung’s success has been their willingness to increase promotional spending. Considering that their other divisions don’t require as much “marketing expense” (semiconductors, LCD certainly, and TVs and Appliances to a lesser degree due to a smaller sales growth) we can imagine that the vast majority of this promotional spending has been in support of their mobile brands, Galaxy in particular.”

I have to admit, it does seem like Samsung ads are everywhere these days. I open a magazine, and there’s a Galaxy S III ad. I’m watching TV, and there’s Lebron James pitching the Galaxy Note II — I wonder how much that one cost.

But Samsung’s marketing strategies are obviously working. In the latest comScore study, the Korean manufacturer is still the lead mobile vendor in the US. And it goes back and forth with Apple for top smartphone vendor.

  • samsung is nothing without andriod !!!!!

    • samsung is just making volumes in handsets bcoz they r advertising it too much, at least here in New Delhi, its impossible that u r watching tv for just half n hour and u dont see any samsung product ad,,, if they only do ads like iPhone or htc then nobody will even think about purchasing any product from them.

  • I guess the only reason Apple has an operating margin of 45% is because the products are overpriced. But they can afford it, people will buy it.

  • I guess that big tall black dude needs to get paid to play with a galaxy s3…

  • ClaudieX


  • Lordthree

    Fuck samsung. Shameless thieves. Boycott

    • Fuck Apple and their “innovation”

      • Lordthree

        Samsung is a fucking joke
        Go ahead and keep supporting these clowns tho you nimrod. Anything as long as it’s not Apple right? Piss off.

      • LOLOLOL you Apple fanboys are all the same. You cant seem to realize that Android is already years further innovation than crapple. When was the last time apple changed something in iOS? the iPhone 4S? LOL that was just a big slap in the face to you fanboys and you dont seem to realize this.

      • Darius

        You might not be shamed enough so let me tell you that only people with accounts can downvote while anyone can upvote. Yet your comment was such a fail.

      • yash patel

        wow, you must be a major samsung fanboy to come to a apple blog and troll on apple.

      • Fucking ignoramus.

      • Fartdroid

        Faggot samsung fanboy just like you’re a romney dog.

      • i love how you cant make an educated comment about why iPhone is better, therefore you must assault my political views. Everyone knows the election was rigged and your beloved Obumass is a commie fucktard.

    • seyss

      cant upvote you enough

    • Tell me at least one “new” thing and “cool” feature on their current ip5 that isnt already on android. iOS 6 was a FAIL and even android 2.1 which came out like 3 years ago has WAY more features. So please, drop the fanboy bs and give me a few reasons not to hate on iPhone. I had an iphone 5 and switched to GS3 because i realized that it is just WAAAAYY more superior to iphone in every possible category.

      • Kurt Andersen

        I may not like Apple like you, but I sure like their OS. Does that make me a fanboy? No. I don’t go crazy over some panoramic or Notification Center as I feel that they are supposed to be there anyway, but aren’t people also going crazy with Project Butter, which was available since the first Windows and iOS phones?

        Features aren’t everything. Honestly, tell me how many features you use per day. You’re probably going to use your phone for Facebook telling the world how great you are after following a tutorial to root your phone.

        The panorama feature is crap, the share shot feature is crap, and even the Jelly Bean release is crap. Why do I say so? All my friends who updated to Jelly Bean were complaining about how laggy and unresponsive their phones were, and how much the battery sucks and how the charging didn’t work properly. Wow, how superior.

        I agree that iOS 6 was a fail, but why pick on one specific OS? I feel that all the versions before Jelly Bean were and are still fails, so doesn’t that mean that the iPhone was way more superior than other Android phones back then based on your logic?

        Coming back to Project Butter. Previously, people like you are insisting that Android has no lag, and it is smoother than iOS. Then you guys went completely insane when Project Butter came out, like it is the best thing ever. But have you forgotten that the OEMS don’t care about updating most of your phone’s firmwares? In a year from now, your phone will be stuck at the same firmware while others continue to receive upgrades.

        I feel that Nexus devices are superior to Samsung’s Galaxy phones, but why aren’t a lot of people using them before? Because of Samsung’s advertisements. Some Android fanboys that I know even think that Samsung made Android. Yes, how smart. All the people are brainwashed by Samsung to buy their phones even though there are much more superior devices. You guys claim that the iPhone 5 is overhyped, but the Galaxy S III is the most overhyped phone. What features that it have that other Android phones don’t? The lame popup view?

        There is no reason to hate on any phone. If I don’t like how something works, it doesn’t mean that I hate the phone. I do like the Samsung Galaxy S III, but I like the iPhone 5 even more because I like the way it feels, but I am not forcing other people to like it too.

        You, on the other hand, hate on a phone that you claim to own and you’re going to an iOS blog whining about how superior your phone is. I don’t give a damn about what phone or company you hate, but when you crossed the line by calling people fanboys, I simply cannot stand it any more.

        Who cares about new and cool features when the phone doesn’t really need it? I am not saying that if iOS doesn’t have it, I don’t need it – I jailbreak my phones to do what I want, but if you really like Android so much that you came to this blog to bitch about it, please think about who is being a fanboy now.

        I’m tired of seeing people arguing over their preference of mobile operating systems. Android is good, iOS is good, Windows Phone is good. There are NO bad operating systems. All have their advantages and disadvantages. It just depends on which advantages you like, but it seems that you are ignoring all the disadvantages of the operating system that you prefer.


      • Lordthree

        Don’t bother with this creep. 85+% of mobile traffic is iOS. These apple hating fandroids only use there phones to customize live wallpapers and ridiculous nonsense that they think expresses their ‘individuality’. It’s just a sad joke. Meanwhile… Back in reality http://chinalaborwatch.files.wordpress.com/2012/08/samsung8-271.pdf

      • Have fun in Apple’s closed off garden while i enjoy my custom jelly bean rom with the INSANE amount of customization. have a nice day!

      • Fartdroid

        Holy shit, awesome ownage there.

      • ^^^ im not reading all that

      • Lordthree

        Android is still janky crap even after a million reskins and quad cores. iPhone 4S still rolls GS3 on almost all practical applications… And that’s duel core vs. quad core. Reason = ANDROID isn’t a proper OS. It’s not even real java! It’s a cobbled together java-run-time rofl.

        Hey but if you like samsuck so much…

        And enjoy supporting child labor, unsafe working conditions, and bribing inspectors.

      • * Dual core, sorry had to correct. And yes, I’m happy with my iPhone 4 🙂

      • End of thread….. i keep telling folks the S3 was killed by the 4S a long time a go the 5 will kill the S4

      • Its amazing how ignorant you are with tech because Android is based on Linux, which is the MOST stable operating system to date. Yet, somehow a 5 year old OS made by Apple has had no significant changes. You apple fanboys are all the same because your blinded by the fact that there is more out there than the same shit phone that Apple releases every year. OMGGGGG it…. has…. Siri!!!! that must mean…its better!!!! Grow up people will ya?

    • Godzilla11

      Agreed. Samsung are the vile spit of the corporate world. Piggybacking Apple’s innovations THEN mocking them? If I was an Apple Exec I’d be looking for Samsung’s head on a stick.

  • That’s what it takes to acknowledge an iSheep. And they are having a lot of success.

    • Lordthree

      How much does samsuck pay you to troll Apple blogs? Get a life

  • Rav1

    I bet Lebron James uses an iPhone. As for the marketing Apple is has a much higher appeal as all kids, teenagers, and adults are in love and non tech enthusiastic people are the new fanboy.

  • When you sell phones 300% over cost, like Apple you would expect margins of 45% or higher.

    • yash patel

      and when you get cheap and sell phones with cheap plastic back and screen that cracks way too easily you can expect your profit margin to be 17%

  • SteveScatJobs

    I hate Samsung and Apple, all you goats and sheep need to shut the f*uck up! I regret buying the iPhone 5 because it’s no different than the iPhone 4S, the only difference is screen size and a slightly faster processor and plus I find the iPhone 5’s screen to less responsive than the 4S’s screen.

    • Fartdroid

      here we go again android fanboy, u must enjoy the ‘revoulutionary’ gs3 mini, galaxy note 2 which adds a stylus! And let’s not forget the awesome galaxy tablets that look just like an iPad in landcape. Grow up and stop complaining.

    • Hyr3m

      iPhone 4 to iPhone 4S was a bigger upgrade than 4S to 5… Apple’s shenanigans are really pathetic…
      About the article… I guess it’s useless to point out that “size doesn’t matter, it’s how you use it that’s important”. Apple are always using shamelessly overstated out of context subjective superlatives to market their products… it’s not about money but about ethics; they have none so they win… This is not a movie… bad guys actually win. (“Bad guys” are pretty much already running this civilization in case you didn’t notice)

  • shar

    yeah! yeah! yeah! blame it on ads 😉

  • It is clear that Samsung’s aim is to dethrone Apple by becoming more competitive instead of profitable. My question is, hasn’t samsung learn that what people wants is quality?
    With these numbers, we can clearly say that Samsung is not a customer based company. It’s a company trapped in the past where the only important thing is to sell a product by advertising it as much as possible, a Product approach. Even Philip Kotler tells us about this defective and old marketing approach in his book “Principles of Marketing 4th European Edition” by Pearson Education. Eventually it sells, but, it doesn’t ensures long term sales. If I was an investor, would clearly put my money somewhere else since customer loyalty is in danger. In the other hand, Apple says “we create the products we want to use”. There is no better example of a customer based company. They meet customers wants and needs by creating a product that will therefore deliver satisfaction at the right profit.

    Samsung? I rather go for principles.

  • Say no to Samsung

    Just read a news about Samsung’s Taiwan office hires part-times to write all sorts of bad reports on other brands and if someone leaves a bad common about Samsung, those part-time blog writers will all jump on this person. This is the real Samsung that you don’t know about.