Brutal 2013 for smartphones faces Samsung and Apple

“Samsung and Apple both got knocked down in trading this week even after reporting healthy results and soaring profits,” Parmy Olson reports for Forbes. “It’s hard to gauge what traders are thinking in the midst of short selling and locking in profits, but a big reason may be concern about the future for the dominant duo, and greater challenges in both developed and emerging markets.”

“The challenges are circumstance, and greater competition. The United States and most of Western Europe are saturated with smartphones, with American users in particular locked in to their devices for at least a year or more because of carrier contracts,” Olson reports. “But look East to where smartphone adoption is soaring, and the competition is getting brutal.”

Olson report, “Price is the main dilemma for Apple and Samsung. Their net profits grew to $13.1 billion and $6.6 billion respectively in the last quarter, largely by selling so many high-end smartphones and feasting on fatter margins. Apple sold 47.8 million, Samsung 63 million, both a substantial jump from last year. But with cheaper handsets being introduced by Chinese device makers, along with march of alternative, open-sourced mobile operating systems that are also cheaper to run, it’s no wonder that Apple is under pressure to release a cheaper iPhone, and Samsung is preaching caution… China’s Huawei is now the third-biggest smartphone manufacturer in the world by shipments, according to IDC’s latest quarterly survey of the industry. Its year over year growth in shipment was a phenomenal 89.5%.”

Read more in the full article here.

MacDailyNews Take: Huawei, ZTE, etc. give new meaning to “Chinese junk.”

Related article:
Analyst: Apple dominating U.S. smartphone market, but international iPhone growth is slowing dramatically – January 25, 2013

29 Comments

  1. Sell them on the service – Apple Store, and Applecare.
    Sell them on the ecosystem – App Store

    But really the iPhone 4 and 4s are going to be bigger sellers than the 5 in China.

    1. “But really the iPhone 4 and 4s are going to be bigger sellers than the 5 in China.”

      The iPhone 4 and 4S will be bigger sellers than the 5 wherever local carriers have yet to roll out LTE networks (just about everywhere). That will reverse in 2014.

  2. I am making some assumptions here but if Apple sells 200M phones a year and there are 7 billion people on Earth isn’t that 3% of the population on Earth buy phones annually? Yes they are growing at a decreasing rate but did anyone honestly think they could sustain 100% YOY growth? Get real. Even if growth flattens they will still capture a healthy share of markets profits. Of course as we are all learning the street doesn’t care about profit, past or future. It’s obviously about potential for profit as Amazon stock valuation is proving. So frustrating watching this.

    1. AMZN has a P/E of 3,300

      What a joke! That’s like the most over valued stock in history!

      Wallstreet moves price on fantasy. Maybe AAPL’s real profits are too real for them to understand. Wallstreet lives in LaLa land

      1. Wall Street only pumps the stock of its customers. Apple with its mountain of cash could buy wall street’s praise if it wanted to and pump the stock, but it’s taking the high road & letting fundamentals speak for themselves. Unfortunately when you hit a rough patch where your growth, sustainability is questioned, Wall Street is not going to protect the stock.

    1. If Porsche has market saturation, so does Apple. What will investors do if Apple confirms flat sales? Does Apple need to sell iPhones at 28% annual rate to be successful. You can’t have it both ways.

  3. Apple = sold, others = shipped. Did Samsung really state that they shipped/sold 63 mil phones? I thought they only stated general numbers like phones represented 60ish% of the profits.

    Let’s see what the numbers will be after china mobile & NTT Docomo are on board.

  4. What you all don’t get, that these analysts do get, is the simple fact that if the stock price of Apple goes down, that means they will sell less stuff. Just face up to it, these guys are just more intelligent than us. That’s why they are analysts.

    1. Except that apple is selling more stuff than ever before.

      Analysts are paid to do what their firms dictate & one should always question their true motives. If amazon & google are doing business with you but not apple, I wonder why the negativity is always focused on apple?

      1. I know. I was just exploring the possibility that the total lack of logic in their so-called analysis was actually something beyond my capability to understand. But then I remembered seeing the idiots on the market floor waving their arms around with wild, staring eyes, and the spates of suicides when they lose a few million and of course, they are insane, so the analysts they employ or support by following, must be equally insane.

        They don’t matter if the people running the company remember that what is most important is the people who work for the company, and their customers. Take care of that and the crazies among the shareholders (who unfortunately control a lot of shares) will do the least possible damage.

        Shareholders are there to get initial capital to start things off. After that they’re just an unfortunate side-effect to be coped with. One day, when all homo sapiens are actually sapient, this will all be a source of great joviality. Until then, we can just marvel at how rich some stupid people are able to become, and how magical this world truly is!

    2. The stock price going down is more so telling of the disbelief in Apple being able to continue to have healthy growth. Most of these out-of-touch analysts act as though a smartphone will remain useful for as long as a home phone and its just not true. People will always buy phones and Apple will always have a huge place. Most android phones are only placeholders until their carriers can sell or owners can afford an iPhone.

  5. “Samsung [sold] 63 million”: could be in truth so, could be a phony number. Strategy Analytics put it out, not Samsung itself. As usual the press fails to remark on the startling fact that the largest phone company in the world refuses to release official sales numbers *and no one ever bothers to call them on it*. Isn’t it high conceivable that the prior estimates of the “independent analysts” have been so high that Samsung now simply cannot easily provide the true ones?

  6. Dismiss or denigrate iPhone competitions in China all you want, but my local sources have told me they are getting noticeably better by the quarter and the quality/feature/price differentiation is getting narrower.

    S4 attracts an incredible amount of interest and unless Apple has a credible low-price solution to challenge it in a timely manner, it may be too late to count China as the next growth engine for Apple.

    A tiny bit thinner, tiny bit lighter, and tiny bit faster new iPhone which is incredibly difficult and expensive to mass produce ain’t cutting it no more. I sincerely hope Cook has something big up his sleeve or Apple and its stock are in for a rude awakening.

    Wall Street thinks Cook has been caught flatfooted and will be unable to play catch up this year. That’s why big boys have been dumping the stock in droves. It’s up to Cook to convince them otherwise and paroting the script like a robot is not going to win them back.

    1. Good try at caricaturing the many advances of the iPhone 5 and Apple’s appeall in China generally. Also, please show me the dozens Chinese sites selling smuggled Samsung phones, sitcoms whose plot revolves around Samsung phones, girlfriends demanding G3 phones from their boyfriends, and dozens and dozens of Galaxy Pads used as gifts by public officials. Apple products have become deeply embedded in Chinese contemporary culture in ways that will be difficult for either domestic brands or those from Korea to overcome.

      1. We’ll see how well a marginally improved 5S compete with S4 in a few months. You’ll be surprised how shallow/deep the iPhone is really embedded culturally once very decent iPhone alternatives are available at very decent prices. It’s not that deep.

        Read Samsung earnings report to find out how well the S3 is doing. S4 will be doing even much better.

    2. Wall Street – has lost faith. They only see – the market saturated, technology at a plateau, innovation as eye candy, not interested in engineering and careless about record earnings. Wall Street likes to go against America itself to invest for self gain extending overseas with risky markets claiming, “Its year over year growth in SHIPMENT was a PHENOMENAL 89.5%”… opposed to actual earnings with a proven OS and proven track record, like Apple.
      Wall Street is a traitor of traders.

      But the stupid thing is, they are ignoring that iOS is more then a operating system for PHONES…

      iOS is the most successful operating system ever, and for Tim to let Scott go was the most foolish thing Tim has done yet. Apple changed its name to Apple Inc., iOS made what Apple is today. The devices Apple has produced changed the face of this Planet, disrupted markets that sat fat and lazy. Placed new interest on upcoming technologies and revitalized old (like, Igzo and Corning). iOS is Apples goldmine. Wall Street is foolish.

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