Sour Apple: Samsung regains top spot in smartphone sales

Chuck Bednar for redOrbit.com – @BednarChuck
After briefly being locked in a virtual dead heat with Apple in terms of global smartphone sales in the fourth quarter of last year, Samsung has once again pulled ahead of its US-based rival and reclaimed the top spot in the mobile device market, according to media reports.
Figures published by The Verge on Wednesday reveal that, while the two companies had each shipped about around 74 million devices worldwide in Q4 2014, Samsung’s sales were up to 80-plus million during the first three months of 2015, while Apple’s had fallen to 61 million.
However, the news wasn’t all good for the Korean tech giant. While sales are up, profits fell for the fourth consecutive quarter, according to Mashable. Samsung made $4.3 billion in Q1 2015, a 39-percent decline compared to the same period last year, the website added.
So what’s up? Why isn’t Samsung making money?
The reason, according to analysts, is due to the bulk of the company’s sales coming from the less profitable low-end and mid-range devices, such as the Galaxy A, E and J line, while Apple’s sales are from more expensive smartphones. Samsung may sell more phones, but Apple makes more money from each device it sells, they explain.
Neil Mawston, executive director of Strategy Analytics, told Mashable that the Korean company has been caught in what he calls a “pincer movement,” meaning that it faces competition from Apple on the high-end of the smartphone spectrum and from start-ups such as Chinese company Huawei on the lower, budget-friendly end of the spectrum.
He added that it had taken Samsung “several quarters” to react to the competition on both ends and develop products to address the issue, such as the high-end Galaxy S6 and Galaxy S6 edge that were designed to challenge Apple’s iPhone 6 and 6+. While it’s a step in the right direction, Mawston said that Samsung likely has “another year or two of work” to do to fully recover.
It has also launched new, cheaper devices such as the Z1 (which costs just $92) to compete with the likes of Huawei and Xiaomi, the website added. The firm has also been investing in making its own microchips, screens and other components in order to reduce reliance on third-parties and make more money from each phone.
“All of that work and all of that investment that the company has had on the high end will be trickling down to the other designs and hopefully yield better cost control,” said ABI Research analyst Jeff Orr. However, he noted that it would still be difficult to appear to consumers at all ends of the spectrum, since it “has to compete with every… phone company out there.”
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