Article
Samsung overtakes Apple to become world smartphone leader
Apple drops to third by revenue after South Korean company announces strong growth in phone handsets division
The Samsung Galaxy tablet is at the centre of a global patent battle between the South Korean company and Apple. Photograph: Odd Andersen/AFP/Getty Images
Samsung zoomed past Apple to take the smartphone crown in the third quarter, and become the biggest mobile phone maker by revenue, after it announced strong growth in its handset division as part of its quarterly results.
The company also said it expects strong sales of its smartphones in the coming quarter, with new models backed by Google due to debut in the UK and elsewhere during November.
The company was pipped though by Nokia, which remains the world's largest seller of mobile handsets by volume. Apple meanwhile has dropped from being the biggest smartphone maker and mobile phone company by revenue in the second quarter to rank behind Nokia and Samsung in revenue.
Although Samsung declined to give figures for its smartphone or feature phone sales, Jae Lee, a Daiwa Securities technology analyst, estimated that in the third quarter it sold 28m smartphones – well above Apple's figure of 17m for the period.
In the second quarter, Apple was reckoned to have just outdistanced Samsung with 20m iPhones sold, but saw a rapid slowdown in the third quarter as would-be buyers awaited a new model, while Samsung piled on the pressure.
The two companies are locked in a series of legal battles around the world over alleged patent and "trade dress" infringements relating to the iPhone, Samsung's phones and the iPad and Samsung's Galaxy range of tablets. Samsung did not give any indications about tablet shipment figures for the quarter in its earnings release.
The company said its telecommunications business hit a record in quarterly sales of 14.9 trillion won (£8.37bn), a 37% increase from last year, with growth mainly due to strong Galaxy smartphone sales. Operating profit hit 2.52tn won, a new record for the divison.
Nokia previously announced that it had shipped 107m handsets in the period, generating €9bn (£7.9bn) of revenues. Apple had mobile revenues of $10.98bn (£6.8bn) for the quarter.
The Korean electronics company said quarterly net income fell by 23% year-on-year to 3.44tn won following weaker demand for its flat panels and computer chips – of which it is the world's biggest manufacturer. Group revenues grew by 3% to 41.27tn won.
A Samsung spokesman, Nam Ki-yung, wouldn't comment on whether Samsung had passed Apple in smartphone sales, saying the company no longer provides its sales figures for handsets. Samsung did say, however, that handset shipments jumped more than 20% from the previous quarter, and that its global smartphone sales were up fourfold from last year.
For the period last year, the research company Gartner calculated that Samsung shipped a total of 71.7m handsets; a 20% rise would indicate that it shipped just over 86m in the three months from July to September.
The company's display panel business suffered a quarterly loss of 90bn won and its revenue of 7.08tn won was down 13% from a year earlier. Samsung's semiconductor businesses had sales of 9.48tn won, a drop from last quarter.
"Looking ahead into the fourth quarter, when industry demand is traditionally at its peak, Samsung expects sales of mobile devices to remain strong and flat panel TV shipments to increase," the company said in a statement.
Samsung also said the third quarter saw increased demand for flash chips used in mobile devices and enhanced revenue in the business that creates mobile application processors and image sensors.
The gains in smartphones came despite the South Korean electronics giant being locked in a global patent battle with Apple, which began legal action in April against Samsung for what it says is uninhibited copying of its iPhone and iPad designs.
Apple says the product design, user interface and packaging of Samsung's Galaxy devices "slavishly copy" the iPhone and iPad. Samsung fought back with lawsuits of its own, accusing Apple of patent infringement of its wireless telecommunications technology.
Earlier this month, Samsung asked Japanese and Australian courts to block sales of Apple's new iPhone 4S in those countries over alleged patent violations. They have not so far done so. Samsung is also appealing against an Australian court's decision to temporarily ban sales of Samsung's new Galaxy tablet computer.
In an attempt to win sales in the market between smartphones and tablet PCs, Samsung on Friday unveiled a new Galaxy Note, the Yonhap news agency reported.
The Galaxy Note is smaller than tablet computers but offers the same features as other wireless devices with applications. Its 5in screen is bigger than the Galaxy S2 smartphone, and a digital pen can be used to write on the screen, Samsung said.
Yonhap says the Note will debut in Europe next month and then later in China, South Korea and other Asian countries.
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User Comments
timacheson
28 October 2011 1:18PM
Samsung has soared past Apple to become the world's biggest smartphone maker. And that's just one manufacturer.
I confess, I've been waiting all morning and into the afternoon for this article. I've been, looking forward reading The Guardian's analysis of this story, and I anticipated some interesting arguments and theories in Apple's defense. It proved to be a more balanced article than I had expected -- it's certainly informative.
Only a few days ago The Guardian made this statement:
"Samsung: the giant that needs a touch of Apple's cool ... world's largest in technology sales, yet is still seeking the elusive formula that will get customers to seek out its products first"
http://www.guardian.co.uk/technology/2011/oct/03/samsung-giant-apple-cool
Is The Guardian so in love with Apple that they miss important trends in the tech industry?
For a moment, let's ignore empty pro-Apple rhetoric about the unbeatable magic of the corporation's holy products.
In reality, clearly, what consumers really want is choice -- something that Apple has fatally failed to realise.
Congratulations, Samsung.
Scoob1011
28 October 2011 1:24PM
The smartphone marketplace is going to look rather different in a couple of years time, and my guess is that shift will not favour Apple.
Apple are sorely missing the Jobs Magic
Spikediswhack
28 October 2011 1:26PM
I confess, I've been waiting all morning and into the afternoon for this article.
Wow. You should find something better to do.
paulsmith288
28 October 2011 1:28PM
I bet apples legal / marketing department will have something up their sleeves.
Just a pity it wont be their R&D / engineering division that wins them the fight.
meestersmeeth
28 October 2011 1:28PM
Good for Samsung, they needed a bit of good news after all the crap about copying Appke devices etc. and it sounds like their Galaxy S2 is very popular.
But next quarter the lead will likely change again, and again the quarter after that. Is all very interesting but largely meaningless as everyone is on different release schedules.
meestersmeeth
28 October 2011 1:31PM
A Samsung spokesman, Nam Ki-yung, wouldn't comment on whether Samsung had passed Apple in smartphone sales, saying the company no longer provides its sales figures for handsets. Samsung did say, however, that handset shipments jumped more than 20% from the previous quarter, and that its global smartphone sales were up fourfold from last year.
Why wouldn't they release smartphone sales figures any more?
pittens
28 October 2011 1:34PM
Lol, anti-Apple fanatics "waiting all day" for an article which might have some bad news for Apple. How sad.
manchurian123
28 October 2011 1:39PM
"Samsung overtakes Apple to become world smartphone leader"
So you post a picture of a tablet???
huddledmasses
28 October 2011 1:40PM
I have a Samsung Android smart phone, and it's driving me to Apple. The device is JUNK! The interactivity is lousy -- there's often a 5 second delay between touch commands. There are many other glitches with Samsung smart phones, too. According to company's web site, I know this is a problem many other Samsung smartphone users are experiencing, too. I'm not alone.
My my observation, Samsung's products are inferior to Apple's. They may be less expensive, but you get what you pay for. At least Apple products work as promised.
pittens
28 October 2011 1:41PM
The main reason for Apple's sequential decline last Q was the anticipation of the iPhone S. Since then the iPhone 4S has sold a few million in it's first week, or so in 7 countries, and is now on sale in 22 more.
Tim Cook also said that the iP4 at the lower price was continuing to sell through, and AT&T in the US ran out of the 3GS. So I would see Apple getting an increase of 150% sequentially this Q - particularly as it is a Christmas Q. So back on top.
In reality, clearly, what consumers really want is choice -- something that Apple has fatally failed to realise.Congratulations, Samsung.
Choice comes from the entire market, one which includes iOS, Android, WP7 and more. There is plenty in the smartphone market, unlike the desktop PC market. Running Windows. Which, i bet, you have.
JedFanshaw
28 October 2011 1:44PM
heresy!
I was under the impression that it was unlawfull to publish articles like this alleging that other companies outsold Apple
alexredcloud
28 October 2011 1:47PM
@meestersmeeth
Why wouldn't they release smartphone sales figures any more?
No idea but I'd like to know if phones 'given free' on contracts count as sold or not? I suppose activations is a better indication of how many phones of a particular type are actually being used.
I reckon it is just makes business sense not to allow competitors too much information about your company's performances.
meestersmeeth
28 October 2011 1:51PM
In reality, clearly, what consumers really want is choice -- something that Apple has fatally failed to realise.
"clearly"?
There's a choice of three models within the Apple range, all of which now ship with ios 5 or are capable of running it, as well as the choice of every single Android or WP7 phone. Also I've never heard anyone moan "I wish there was a greater range of Apple devices to choose from". Perhaps you have but you didn't say anything about that. Wondered what your evidence was of it being a real issue for Apple, rather than a problem you've made up in your head to make it seem like Apple are really really in trouble now.
ajchm
28 October 2011 1:52PM
the difference is entry pricepoints .... samsung sells basic phones with few additional feautures through to products similar to iphones . and at more competitive prices. i like my samsung phone and at under £100 i could then buy a call package right for me rather than a contract incl a handset .... the iphone is £500 to just buy!
CharlesArthur
28 October 2011 1:53PM
@alexredcloud "I'd like to know if phones 'given free' on contracts count as sold or not?"
Samsung's numbers would be shipments, and phones sold through carriers on contracts would certainly count as sold. (Though some companies might use a different accounting method - for a while Apple had a system where it didn't recognise all iPhone revenue at once, but spread it over multiple quarters. That was hard to unravel; it's stopped doing that. Possibly Samsung is doing the same. The earnings results, as linked, don't show.)
Nattydread69
28 October 2011 1:53PM
@huddledmasses
I don't have that problem. Do you really have a Samsung phone? or are you an
apple troll!
realist66
28 October 2011 1:56PM
@huddledmasses
What phone? What software are you running in the background? My Sammy GSII only goes slow when the kids play some sucky game that gets stuck in a loop.
Facts please, not rhetoric!
huddledmasses
28 October 2011 1:59PM
@Nattydread69
Yes, I really have a Samsung smart phone. I found the price attractive. However, after experiencing an iPhone at the Apple store, I've found there to be a major difference in the usability of the devices.
vinnyVhaircut
28 October 2011 1:59PM
Isn't this old news?
Didn't the WSJ have an article on this at the start of the week?
meestersmeeth
28 October 2011 2:03PM
huddledmasses: they will disregard your personal experience until you at the very least tell them what Samsung phone it is and wha OS it's using.
Even then your comment is unlikely to be ake seriously by Android evangelists because you dared to suggest you prefer an iPhone, which instantly categorises you in their mind as either a shill,a troll or an Apple fanboy.
Finite187
28 October 2011 2:04PM
It is usually the way of Apple to release something innovative that sells well, but eventually be taken over by their competitors due to the closed and proprietary nature of their product.
With PCs it was Microsoft, with mobiles it'll probably be Android.
undersinged
28 October 2011 2:06PM
Very dry report. Feels very secondhand, and somewhat behind with the news. The analyst figures estimating around 28 to 30 million smarthpone shipments for Samsung first appeared about two or three weeks ago.
You cite a Korean news agency on the Galaxy Note's availability, but the Note had a big official launch event right here in London on Thursday. Were you not invited, Charles? It was announced there that the release date has been brought forwared, and, it will be available from Carphone Warehouse, O2 and Phones4U from Nov. 3rd.
I imagine Samsung might be slightly annoyed about the fact that Ice Cream Sandwich includes some of the features (pen interface, calendar zoom), that make the Note unique.
The latest news from Samsung is that they're proposing to bring phones with flexible screens onto the market next year.
ThomasLion
28 October 2011 2:06PM
@huddledmasses
I LOVE my Galaxy SII. It has none of the faults you describe - maybe you went for an older, inferior model? It's cheaper, slimmer and lighter, and more user-orientated than an iPhone. It's fast and intuitive, the camera is brilliant, the storage is expandable... I could go on. Suffice it to say that everyone should get one if they can.
Credit to Apple for leading the way with smartphones, but they are being rapidly eclipsed by the flexibility and competitiveness that Android embodies.
jaymbee
28 October 2011 2:08PM
@Finite187
It is usually the way of Apple to release something innovative that sells well, but eventually be taken over by their competitors due to the closed and proprietary nature of their product.
Yes, just like the iPod!
Spikediswhack
28 October 2011 2:09PM
No idea but I'd like to know if phones 'given free' on contracts count as sold or not? I suppose activations is a better indication of how many phones of a particular type are actually being used.
Activations are a terrible measure because of all the duplications involved. The sales will include phones 'given free' because those phones are still sold, they're just being paid for over time. It's worth remembering too that you aren't the manufacturer's customer, the mobile network is the customer.
wtfcuk
28 October 2011 2:16PM
Apple has peaked -- this looks like the beginning of the end of their moment of glory.
...
but now Samsung alone has easily overtaken Apple's smartphone sales figures. Apple is destined to be left behind.
Right. And what is the number 1 mobile OS in the world by market share?
iOS: 55%
Java 18%
Android: 16%
and the trend for both iOS and Android is up.
Apple if you haven't noticed also ship a ton of iPads and iPod touches although you'd expect the latter to be cannibalized by iPhones in the long term.
LondonFido
28 October 2011 2:18PM
timacheson
Apple quickly grew bloated during the period of success that followed getting lucky with iOS
Getting lucky with iOS? I'm an occasional observer of the never ending war of words between the pro- and anti-Apple camps but I think this is the first time I have seen Apple's development of its mobile operating system described as "lucky". So the list of Apple epithets now reads - devious, manipulative, paranoid, controlling, mega-maniacal, aggressive, anti-competitive (etc) AND lucky.
roopman
28 October 2011 2:19PM
@meestersmeeth
There's a choice of three models within the Apple range, all of which now ship with ios 5 or are capable of running it, as well as the choice of every single Android or WP7 phone.
Compare Samsung's handset range to Apple's. Physical keyboards, tiny screens, massive screens, cheap and cheerful, expensive and powerful.
That's choice. One phone plus two older versions of the same phone isn't choice. ('You don't want a Renault Clio? Ok how about this older Renault Clio?')
There's advantages and disadvantages to a company producing one highly optimised phone. Lack of choice is one of the disadvantages.
@pittens
Choice comes from the entire market, one which includes iOS, Android, WP7 and more.
er yes. Which is why Apple are losing some of the market.
RhysGethin
28 October 2011 2:20PM
@timacheson
Devoting yourself to some faceless South Korean chaebol is not a substitute for having friends or a social life.
Perhaps you need some more varied interests in life.
jimblejamble
28 October 2011 2:23PM
Things change so fast in the tech world at the moment, impossible to keep up. This week's hot device is out of date within three months. Either way, it all ends up in a large land-fill eventually.
roopman
28 October 2011 2:24PM
There's advantages and disadvantages to a company producing one highly optimised phone. Lack of choice is one of the disadvantages.
And that's not even mentioning Apple's approach to what the user may choose to do with the device once they'ge got it.
Apart from mentioning it now of course.
wtfcuk
28 October 2011 2:24PM
It is usually the way of Apple to release something innovative that sells well, but eventually be taken over by their competitors due to the closed and proprietary nature of their product.
Just like the iPod you mean?
This is not the PC wars of the 90s again. The key issue today is the carriers which even out the pricing. It's inevitable that Android will have a larger market share in phones in the long term, but with the huge ecosystem of the app store for the iPhone and iPad in place Apple will likely retain a healthy market share rather than a niche one.
Chronos
28 October 2011 2:26PM
voting yourself to some faceless South Korean chaebol is not a substitute for having friends or a social life.
Don't forget the weapons sales. At least Apple don't do that.
wtfcuk
28 October 2011 2:27PM
And that's not even mentioning Apple's approach to what the user may choose to do with the device once they'ge got it.
Unlike Android devices which you cannot even update to the latest OS.
Ah, I get you. You mean that since Android is 'open' that the majority of users can simply go into the source code, and rewrite it to achieve this update themselves.
wtfcuk
28 October 2011 2:31PM
Apple quickly grew bloated during the period of success that followed getting lucky with iOS
Yeah, that is a laugh (more likely trolling). Apple's whole development team for Webkit is I believe 3 individuals. Microsoft had approximately 40 people working on the shutdown menu for Windows.
timacheson
28 October 2011 2:35PM
@wtfcuk
"Yeah, that is a laugh Apple being bloated] "
Apple has over 60,000 employees, and that doesn't include the vast armies of slave labour in outsourced offshore sweat-shops. Seems a waste to comment when you have no idea of the basic facts.
Nattydread69
28 October 2011 2:37PM
@huddledmasses
you aren't sounding very credible.
What model is it?
What version of android?
I'm sure using an iphone is a pleasant experience, it should be you've paid through the nose for the privilege
timacheson
28 October 2011 2:38PM
@LondonFido
"Getting lucky with iOS?"
Yes, that's exactly right. Successes in the tech industry are often decided as much by luck and timing as anything else. In Apple's case, marketing was also an important factor.
Take a look through Apple's past failures.
jaymbee
28 October 2011 2:40PM
@timacheson
Apple's 60,000 employees includes all of its retail staff. The 'slave labour' are employees of manufacturers who make stuff for more than just Apple.
roopman
28 October 2011 2:41PM
Unlike Android devices which you cannot even update to the latest OS.
Ah, I get you. You mean that since Android is 'open' that the majority of users can simply go into the source code, and rewrite it to achieve this update themselves.
Customisation of the OS itself is a massive one but I didn't mean that.
I mean stuff like people carrying their powerpoint presentations around (or any other unsupported file types) on the phone. Or downloading an app Apple doesn't like. Sticking widgets on your home screen. Change the keyboard. Stick a different mail app on there.
Not exactly high-level, programmer-only stuff is it?
As with the wider context of 'choice' there are advantages and disadvantages either way. But Apple's way restricts user choice.
Even if for argument's sake, all of Apple's decisions are objectively better than those each consumer could make for themselves, they still withdraw that choice.
wtfcuk
28 October 2011 2:46PM
Apple has over 60,000 employees. Seems a waste to comment when you have no idea of the basic facts.
And Microsoft with a smaller capitalization has over 90,000 employees. Having many employees does not make you bloated. Samsung have 344,000 employees. Yeah, basic facts are important aren't they.
Here's a basic fact: The Apple stores makes over $60,000 / square metre of retail space. The highest in the world. Bloated. I think not.
Here's another basic fact;
that doesn't include the vast armies of slave labour in outsourced offshore sweat-shops.
You mean the Foxconn factory. The factory that is used by:
Acer Inc. (Taiwan)
Amazon.com (United States)
Apple Inc. (United States)
ASRock (Taiwan)
Intel (United States)
Cisco (United States)
Hewlett-Packard (United States)
Dell (United States)
Nintendo (Japan)
Nokia (Finland)[17]
Microsoft (United States)
MSI (Taiwan)
Motorola (United States)
Sony Ericsson (Japan/Sweden)
Vizio (United States)
etc.
And thus need to be added to their numbers too. And given your concern for these 'sweatshops' I guess you'll confirm you don't use products from any of these companies.
roopman
28 October 2011 2:47PM
Apple's whole development team for Webkit is I believe 3 individuals. Microsoft had approximately 40 people working on the shutdown menu for Windows.
I noticed this was WebKit and not Safari.
Relative importance of each aspect of these operations in respect to the wider operating system? If Microsoft only send one guy to get the coffee does this make them better than Apple?
The shutdown process is used everyday by some users. It has all sorts of implications for running processes and tasks. That article clearly shows some bloat there. Not exactly uncommon for software development.
sehol1
28 October 2011 2:50PM
Would be interesting to know their comparative profit made per unit cos at the end of the day isn't it all about the cash? Apple were never gonna be the biggest seller with one phone model. Also not surprised they didn't want to reveal how many galaxy tabs they will be shipping - not many I would guess! Still well done to them can't comment on the phones as I've never used them but they must be doing something right!
moussif
28 October 2011 2:51PM
@huddledmasses
"I have a Samsung Android smart phone, and it's driving me to Apple. The device is JUNK! The interactivity is lousy -- there's often a 5 second delay between touch commands. There are many other glitches with Samsung smart phones, too. According to company's web site, I know this is a problem many other Samsung smartphone users are experiencing, too. I'm not alone. My my observation, Samsung's products are inferior to Apple's. They may be less expensive, but you get what you pay for. At least Apple products work as promised."
HAHAHA you can't even make up a realistic story properly. "5 second delay"? "According to company's website"? I think you are just butt hurt that the Church of Apple isn't leading any more.
How are they inferior products when the software used is far superior to Apple's and when the hardware is as well? It is just like yesterday that Apple commercialised a phone that has more than 5 megapixels, any comparison of hardware would show that Apple products are inferior.
Even the 4s is just on par with the Galaxy S2 that went out like nearly 8 months ago.
Apple is just unable to innovate anymore since the first iphone. They rip off their customers by adding one feature at the time from one phone to another and still get people to queue for their products. And now, Apple has copid android features for their newest software, such as the notifications bar, tapping twice to optimise the text of any website, and more. I bet you anything, the next line of iPhones will have widgets and multiple screens.
Market share figures of android show who customers find better: constant growth since day 1.
In regards to the price, Samsung Galaxy s2 is on par with the iPhone. What makes it cheaper than the iphone on a contract is because Samsung isn't forcing carriers to charge a minimum of 50 pounds a month like Apple does.
wtfcuk
28 October 2011 2:53PM
@roopman
Customisation of the OS itself is a massive one but I didn't mean that.
I mean stuff like people carrying their powerpoint presentations around (or any other unsupported file types) on the phone. Or downloading an app Apple doesn't like. Sticking widgets on your home screen. Change the keyboard. Stick a different mail app on there.
Not exactly high-level, programmer-only stuff is it?
As with the wider context of 'choice' there are advantages and disadvantages either way. But Apple's way restricts user choice.
Even if for argument's sake, all of Apple's decisions are objectively better than those each consumer could make for themselves, they still withdraw that choice.
Yes, I agree with this well thought out response, but I'm not sure that I agree with the implied conclusion that such choice is always better. If the end result of 'choice' restricts the overall experience in other negative ways such as not being able to update the OS, getting hit by malware, having less choice in the app store of certain kinds of high level apps, then this choice is not necessarily a choice that the average consumer needs, but is more of interest to 'power' users.
Personally, I love the access to the terminal in OS X etc, but have no real need to jailbreak my iPhone. I do like Android a lot too.
rquick
28 October 2011 2:56PM
pittens 28 October 2011 1:41PM
So I would see Apple getting an increase of 150% sequentially this Q - particularly as it is a Christmas Q. So back on top.
So what we are basically seeing here is that the number of iPhones sold is still exactly the same, just that some of the sales is shifted to later on in the year, due to a change in release schedule.
If you want to make statements like iPhone sales have risen, you will need to compare Q3+Q4 numbers to equalise the changes because of the release schedule.
timacheson
28 October 2011 1:15PM
Apple has peaked -- this looks like the beginning of the end of their moment of glory.
With a long, long history of fighting hard for a few percent of the market share in their own core markets, Apple quickly grew bloated during the period of success that followed getting lucky with iOS.
Apple's marketing department practically invented the smartphone, but now Samsung alone has easily overtaken Apple's smartphone sales figures. Apple is destined to be left behind.