Apple to focus on software growth as Samsung warns of shrinking hardware profits

“As Samsung warns investors of the risk of shrinking hardware profits in the future, analysts note that Apple’s future potential lies with exponential software growth, something the company has a distant lead in creating and an apparent exclusive in understanding,” Daniel Eran Dilger reports for AppleInsider.

“A variety of Apple analysts and observers have been struggling to identify the ‘next innovation’ that will propel Apple outward and enable new growth, suggesting everything from wearable computers to HDTVs,” Dilger reports. “However, Global Equities Research analyst Trip Chowdhry noted in speaking to AppleInsider that Apple’s recently outlined changes in reporting its performance highlight the company’s unique software solution to an issue facing every other smartphone maker: the increasing problem of turning a hardware profit in what was once an industry where money appeared to grow on trees.”

Dilger reports, “Not only are the majority of smartphone makers currently struggling to turn a minimal profit or actually losing money, but of the two issuing standout profits, Apple and Samsung, the latter has warned investors that its rapid ascent in smartphone hardware profitability may be a short term fluke.”

Read more in the full article here.

24 Comments

  1. I’m still waiting for the next big feature I never knew was needed but now I cant live without. Its been a while. Cmon apple, do something huge this year!

  2. samsung and apple are still quite close function wise on their phones and tablets so we will see a really intense convergence between iphone 6/ipad 4 and galaxy s5/galaxy tab 4

    they might control the market equally for a long while

    1. The “quite close function wise” might hold for phones but it certainly does not hold for tablets. Tablets are nothing but a software platform. Android effectively DOES NOT HAVE Tablet software.

      That makes an ENORMOUS difference.

      Imagine 2 sports cars, one runs on regular unleaded gasoline, the other runs on Roentgenium (atomic number 111), that has only ever been produced by fusion of Bismuth and Nickel. They are otherwise identical, but the one that you can put regular gasoline into will actually go someplace, the other just sits there and looks pretty.

      That is literally the difference, being able to use the tablet to do things and… not.

  3. The next osx version will surely be Lynx. New powerful links between hardware software and life will be the next value proposition.

    While we’re reading tea leaves get ready for the next iPad to adopt the larger dimensions of the ip5 screen while being much lighter and thinner.

  4. “A variety of Apple analysts and observers have been struggling to identify the ‘next innovation’”

    As if they have a fscking clue about what that will be.

    Tell you what morons, you just keep your ‘analysis’ to yourself, and Apple will let you know by invitation when they are ready to tell you.

    1. Beautifully said Cold.
      To have those A-hole analyst manipulate the latest conferance call burns me up. The talking heads on CNBC(comparable to the National Enquirer) gloating over the unjustified down slide of their previous quarter(the best quarter in Tech history). In the long run, I hope the core fundamentals resolves the injustice or the money sitting on the sidelines due to lack of faith in a true market will grow.

  5. Samsung have been spending a truly staggering amount on advertising and promotion ( greatly out-spending all other tech companies and even outspending Coca Cola ). Clearly they have enjoyed a huge boost in sales numbers, but it’s hard to see how such a high level of product promotion is sustainable.

    It will be fascinating to see how well Samsung does if they reduce the promotional spending to levels that would be comparable to other companies. My feeling is that they have only temporarily bought market share and that their sales will decline when that marketing budget is reduced.

    Samsung seem to be too obsessed with the short term. Buying market share is a quick fix. Ripping off Apple’s designs is a quick fix. Apple’s response to Samsung’s untrustworthy behaviour has been to work towards completely eliminating Samsung from it’s supply chain. Can Samsung find profitable markets for all those components that kept their factories so busy ?

    Apple have not only stopped buying components from Samsung, but are also building up Samsung’s rivals with tremendous investment and huge long-term contracts. Just a few years ago, Samsung was the only supplier in the world able to satisfy Apple’s requirements for quantity and quality. Now there are others who are able to do that, those others would not be where they now are if Samsung hadn’t cheated on Apple

    It’s also worth bearing in mind that Samsung are very secretive about their business results. Unlike Apple, they refuse to disclose sales numbers for their phones, instead they offer guidance for certain individual analysts, which means that those analysts are likely to come up with misleading numbers, but regard them as accurate. Similarly, true costs can be obscured because the fact that Samsung has so many interests makes it possible to shuffle revenue and costs between different divisions in order to create a false impression.

    I think that Samsung will only be enjoying a brief spell in the spotlight before reality kicks in. It won’t be long before journalists, analysts and observers start to realise that Samsung’s performance isn’t quite what Samsung would want you to believe.

  6. Samsung not only have hardware profits problems but their foremost problems is their android os. It’s just a matter of time before their trusted partner Google start screwing them with android.
    If they can do what they did for Apple, Samsung is not far behind.
    Google Motorola is that screw driver. And if Samsung usesTizen or whatever OS,will their hardware sell ??? either way Samsung is screwed. Its just a matter of (short) time.

  7. “As Samsung warns investors of the risk of shrinking hardware profits in the future, analysts note that Apple’s future potential lies with exponential software growth…”

    What does Samsung’s hardware margin have to do with Apple’s a) margins and b) total revenue from hardware?

  8. The word “analyst” has been thrown around so liberally by folks spewing complete nonsense that the word has very little credible meaning now. I think it’s time to make up a new word.

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