Samsung’s smartphone market twice that of Apple

Samsung has become Apple’s chief nemesis in court and on retail shelves. The South Korean smartphone maker now has twice the market share as the Cupertino, California-based iPhone maker, new research finds. According to IDC, Samsung controlled 31.3 percent of the smartphone market during the third quarter, handily beating Apple’s 15 percent share.

The two companies have the smartphone market largely to themselves, with their nearest competitor – Blackberry maker Research In Motion – controlling only 4.3 percent, according to IDC. Nokia even fell from the top five, shipping just 82.9 million handsets in the previous quarter, a 22 percent drop from the same quarter in 2011…

Per IDC, Samsung’s share of the smartphone market grew from last year’s third quarter 22.7 percent, accounting for nearly a nine percent increase. Apple’s 2012 third quarter market share rose less than three percent from its 2011 third quarter, IDC announced.

“Samsung looks to be running away from the pack while Apple’s new product portfolio continues to eat into its decreasing gross profits”, ABI Research senior analyst Micheal Morgan said.

According to Morgan, Apple must ship more than 94 million iPhones in the fourth quarter to keep pace with a 96 percent shipping increase reported in 2011.

Global handset and smartphone shipments in Q3 2012. Source: ABI Research.

Thursday, Apple and Samsung released back-to-back earnings statements.

The iPad maker announced an $8.2 billion third-quarter profit on revenue of $36 billion. Apple saw it’s fiscal third-quarter gross margin slip to 40 percent, down slightly from 40.3 percent a year ago. The company forecast $52 billion for the first quarter of fiscal 2013, which will cover the all-important holiday season.

For its part, Samsung announced a $7.4 billion fiscal third-quarter profit. The South Korean company’s mobile unit powered 69 percent of its overall profit, Reuters reported Friday. Both companies have concerns about the future, analysts say.

“The biggest concern for Samsung is that its smartphone growth momentum will slow”, Hana Daetoo Securities’ Nam Dae-jong told Reuters. Also troubling is whether Samsung can replace income lost as Apple shifts to other suppliers for chips.Experts also believe it will be some time before Samsung’s Galaxy Tab approaches the iPad’s popularity.

The fuel of Samsung’s smartphone market share growth could also be a concern for Apple: the rise of the low-cost handset. Samsung has increased its market share by offering “a range of smartphone products at ever lower price points”, according to ABI.

The research firm also believes it will be difficult for Apple to go after this growing smartphone audience while still producing profits at a level to satisfy investors.

“The strain of rapid growth makes Apple appear to be running out of room at the high-end”, ABI’s Jeff Orr said. Trying to keep profit margins high while also introducing new products “make it increasingly difficult for Apple to move downstream to the rapidly growing low-cost smartphone market”, said Orr.

What do you think? How can Apple fight off Samsung while straight-jacketed by Wall Street expectations?

Must a low-cost iPhone appear to compete against rivals?