Samsung coining it, but playing modest

Jan 25, 2013

That's the smartphone market for you. For a year or two you can have a hit on your hands and everyone loves you. The next (think HTC, Nokia, Sony etc) the hits don't come and you're written off. Whether Samsung can attenuate the irrational rise and fall of investor and user sentiment by issuing sensible warnings in advance is unlikely, but worth a try.

Samsung has posted a profit rise of 76 per cent as a direct result, it states, of the Galaxy which has now consistently outsold and outgrown the iPhone for the past year. And the trend seems to be accelerating - sales in the final quarter of 2012 rose 19 per cent on the previous year.

But all good things must come to an end and Samsung expects sales to tail off in the first quarter this year: partly because it's the seasonal dead spot and partly because the market itself is becoming saturated in the developed world and it's uncertain whether that revenue loss can be made up by the growth of lower-cost smartphones in the developing and emerging markets.

Still, Samsung may be in a better position to intercept the low-cost smartphone market than Apple which looks likely to stick to its current strategy of 'making the best phone it can' rather than cutting corners, costs and margins to go after the low-end market. Such a move, it's thought, will just jar too much with the Apple corporate culture and brand values.

So while it may not succeed (hence the warning of less profitable times to come) Samsung is going to give it a try - new low-cost Androids are expected from the Korean giant this year to tap the emerging markets. And Samsung is expected to launch a new top-of-the-range flagship smartphone - the Galaxy SIV - to keep on taking share from Apple (it hopes).

But I often wonder how many executives over at Nokia are kicking themselves (those that are still there). The Samsung success story (or something close to it) could so easily have been Nokia's had it just bit the bullet and lined up with the hated Google on Android three or four years ago - surely one of the most dramatic and damaging miscalculations in mobile corporate history?

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