As Apple’s profits and iPhone sales grow, Samsung posts stagnating sales, weak profits

“Samsung yesterday posted stagnating sales and its weakest profits since becoming the world’s biggest phone maker in 2012, just a week after Apple released strong financial results driven by a jump in iPhone sales,” Adam Satariano reports for Bloomberg.

“The reports expose a vulnerability in Samsung’s strategy of trying to be the phone company for all people. The high-end Galaxy S line — the most profitable models for the company — is being squeezed by Apple, which will attempt to tighten its grip later this year with bigger-screen iPhones that undercut a key selling point for Samsung,” Satariano reports. “At the other end of the price spectrum, Samsung is grappling with upstart rivals in Asia such as Xiaomi Corp.”

“Apple, meanwhile, is seeing the fruits of sticking with its strategy of focusing on deeper-pocketed customers and not responding to critics who have urged the Cupertino, California-based company to cut prices,” Satariano reports. “iPhone sales increased 13 percent last quarter and the company had its biggest profit jump in two years.”

Read more in the full article here.

MacDailyNews Take: Cheap, IP-thieving, plastic knockoff peddlers eventually get what they deserve.

Related articles:
Samsung’s net profit declines on weaker-than-expected phone sales – July 30, 2014
IDC: Samsung phone shipments down 4%, Apple iPhone up 12% – July 30, 2014
In China, Apple’s focus pays off while Samsung feels painful squeeze – July 24, 2014
Samsung losing ground on two fronts as Apple readies hotly-anticipated iPhone 6 – July 16, 2014

21 Comments

    1. Great for market share, bad for profits and basically unsustainable as a successful business model. Bezos can get away with it because he has a lot of deep-pocketed friends backing him thinking Amazon will be the last man standing in retail in the future.

  1. “Samsung is grappling with upstart rivals in Asia such as Xiaomi Corp.”

    Happy to hear about Samsung’s missed profits and declining sales. However, a lot of my company-loathing sentiment has recently shifted to the deceitful but growing Xiaomi.

    They’re just as bad as Samsung, methinks, but their copycat tactics seem not only more blatant but also more numerous. Xiaomi’s vile CEO seems to have only just started his shameless photocopying of Apple gear…

    1. There was recently an investigative report In the prestigious Chinese journal Caixin that found Xiaomi had exaggerated greatly its popularity in China. And in my own trips there I haven’t seen many Xioami sets and personally doubt their claims snd those of compliant analysts. Rather, Huawei and Lenono seem the most threatening to Samsung. As usual, the western press is both clueless and lazy when reporting on tech in China.

  2. iPhone sales (and profit) continue to grow, even in the quarter before a new iPhone model is expected to be released. Meanwhile, Samsung reports declining sales (and profit) in the quarter that saw the release of the newest “Galaxy” phone.

    Here’s the interesting observation from these results. Samsung sold a lot of phones when they started to “go large” as a way to distinguish its otherwise copycat products (and hide inferior skills at miniaturization behind a huge screen). The assumption was that most (or at least “a lot of”) customers wanted larger phones.

    But these results contradict this assumption. Apple is selling more “small” iPhones, a model nearing its one-year anniversary, compared to Samsung’s LATEST and recent “large” phone. Ironically, Apple is about to release its own “large” iPhone model, just as the “trend” for customers wanting larger unwieldy phones may have run its course. Right now (and last quarter) is about when contracts for the early Android “mega phones” are ending, and those customers want the current “small” iPhone; they’re not waiting for the “large” iPhone.

    Common sense says there is great value in making a mobile phone smaller and lighter (more “mobile”), NOT larger and heavier. I predict that iPhone 6 will be very successful, but that iPhone 5s will remain surprisingly strong as “last year’s model” (in the middle position of the line-up). And iPhone 5c (with new colors) will become stronger as the FREE (with contract) iPhone. After iPhone 5s has completed its three-year run, Apple will release a NEW (latest tech) “iPhone Air” model, that carries the 4-inch iPhone forward in parallel with the larger iPhones.

    1. There are people swearing that it’s better to use a larger smartphone because reading and watching videos on it is “easier” than on a smaller smartphone so it’s hard to argue with that logic. However, a few people don’t speak for the entire smartphone user base. We do know that Samsung does make a smaller Galaxy model but not as small as the iPhone. We’d need to know if many consumers who buy a large smartphone considers going back to a smaller one on their next purchase. I think Apple should make at least two sizes of an iPhone which have the same quality and features and let users decide which one they want. Maybe that will be the best way to disprove that most consumers want large smartphones. At least that way, no matter which iPhone the consumer decides, Apple will still get a sale.

      1. If Apple follows its existing practice, iPhone 5s will still be in the next iPhone lineup, at $100 (at least) less than the new larger iPhone(s). And iPhone 5s (at one year after release) is still far better than any non-Apple smartphone. I think Apple will have plenty of evidence if its customers are showing a higher-than-expected preference for the older “small” iPhone, once the initial early-adopter surge (and pent-up desire) for the larger iPhone is over.

        If iPhone 5s enjoys higher-than-expected demand during the upcoming model year, THEN Apple can begin work on the 4-inch “iPhone Air,” that has equivalent tech of the latest “big” iPhone, for release in 2016. That’s when the two-year contracts for iPhone 6 will start to expire, so customers who didn’t like their larger iPhone (as much as they thought they would) can switch back to a brand-new smaller iPhone. It’s also when the three-year run of iPhone 5s will be over.

        I don’t know how important watching videos is, as a key function of a smartphone, for most people (it’s not for me). Reading books is an important function (at least for me), but I use an iPhone 3GS and I find the width (and height) of the screen (when held in landscape mode) is perfect for efficient low-eyestrain reading. Plus I appreciate being able to carry it in my front pants pocket (or basically ANY pocket) and pull it out with ease at any time. And the easy one-handed use. And not looking ridiculous holding it to the side of my head. 😉

  3. focusing on ‘deeper pocketed customers’ might be right but I prefer to look at it as Apple being laser focused on Better Quality Products for the Consumer (or Best Value for Money).

    Jobs famously said they didn’t know how to make a good quality laptop for the price of a netbook and that’s why they don’t make one.

    I keep getting the feeling of Apple’s rivals is that at the end they don’t care about quality about the consumer but making a quick buck , making ‘just good enough to bamboozle idiots’ products. The don’t really have the passion for the product that Apple does and that’s the real reason they fail .

    1. Wall Street can be blamed for a lot of this “making products that are just good enough” theory. It really hurts when I hear analysts talking about how it’s a shame that iPads last too long and how sad they are to hear consumers don’t need to buy new ones that often. When a company builds good, solid products and some dildos are upset over long durability, that’s a serious problem.

      I personally always want a well-built product that lasts a long time and to hell with Wall Street’s way of thinking of deliberately building products with a short lifespan to shorten an upgrade cycle.

  4. It will be really interesting to see how Samsung is able to turn this around for them. I believe Samsung has already done all it could in the form of offering a fully-featured flagship smartphone and they’ve already surpassed most of the average user’s needs in a smartphone. I don’t think better specs and more features is going to work. A larger display surely won’t work anymore. I can’t see anything short of an indestructible smartphone boosting sales and I doubt that’s even possible. I believe Samsung’s smartphone business has gone as far as it can go and all they can wait for is upgrade cycles based on physical age and breakage of older smartphones. They flooded the market with their own stuff and took away their ability for continued growth.

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