Apple v. Samsung - Size Matters

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The jury is still out on the latest Apple-Samsung patent trial, but Samsung has already won the larger battle.

A chart Apple used during the current case shows why.

When the iPhone was introduced in 2007, Samsung’s U.S. smartphone market share was about 10 percent. By mid-2010 it had dropped to about half that level. By 2013, Samsung had more than rebounded, nabbing nearly a third of the U.S. market in some quarters.

Samsung Market Share Chart

Apple

For all its legal victories, including a roughly $1 billion verdict in the last patent trial, Samsung has continued to grow its share of the smartphone market, both in the U.S. and globally.

Apple’s best shot to slow Samsung’s growth through legal action would have been if it were able to get some injunctions that kept Samsung products off the market or at least forced them to change some of the features Apple claims were illegal copies.

The company briefly got some preliminary injunctions in 2012, including against the Galaxy Tab and Galaxy Nexus phones. However, most of those injunctions were overturned on appeal, while the Galaxy Tab ban was lifted after a jury decided that product didn’t actually infringe.

Apple had a second chance to get sales of some Samsung products halted after winning its last trial. However, Judge Koh declined to award any permanent injunctions after the jury verdicts in the previous case.

At this point, the worst-case scenario for Samsung is that it might have to pay Apple a couple billion dollars some years down the road. While that’s a significant chunk of change, it pales in comparison to the amount of market share that Samsung has gained in recent years.

More Posts About the Apple-Samsung Trial




25 comments
Parzed
Parzed

Try this: go ask average phone buyers what they buy and why.  All you techheads and blogtrolls and electro journalist sycophants sit around all year ordering the hottest new phones as soon as you can, assuming you don't get a pre-release version spoon fed to you.


Try talking to people who have to pay for their phones and figure out how to afford it.  Ask them why they buy what they do.  


I've done that in my office, which is now 100% Android and 92% Samsung, and on all four major US carriers.  Top reasons: replaceable memory cards, performance, 4.4.2 UI commonality, replaceable batteries, common MicroUSB charger port, all the apps we use are available and Google Play makes it snap to deploy them to new phones, we use Gmail for our corporate email service and it's integrated.   Samsung phones are also the first Android device so common that any of us can go anywhere and find cases and accessories.   Up to now, it was blind luck finding something to fit whatever HTC or Motorola was floating around.  


Why did our last few iPhone users change?  A few key examples: one of them took a lot of photos all the time and kept filling up her iPhone 4.  Running out of space all the time was not convenient for that person.  She wanted much more flexibility.  She got a Note 3 and adores it and the ground it seems to fall on all the time.  Also got the watch to go with it and uses the heck out of both devices. 


One other iPhone user got fed up with OS updates and poor AT&T reception and slow speed. She and her entire family went to S4.  As most of the office is also on S4 now, there are a lot of users to help make the transition, not that help has been needed too much.   And no, she has not missed her iwhatever apps.  Still has an iPad for that.  But not an iPhone.


No, the office provides no compensation at all for phones.  People buy their own devices and its up to them to have it connect to work, or not.   It's all free will that has happened to reject iPhone.   

 

osmartormenajr
osmartormenajr

What none is taking in consideration is that the chart in which Ina based her "journalistic" assessment, is provided by IDC, from the number of "smartphones" (by some definition) which Samsung allegedly shipped (quite different from selling)!

Apple used this numbers to boost its request for damages, since its the (fake) numbers Samsung like to promote anyway…

This, by no means, make the numbers, and by extension, Ina's opinio, valid!

Contrary to the general perception of Apple consumers, I don't think the company is a piece of heaven, full of angels, doing only good and so on… I do believe it can screw up, and when it does, it deserves critic (I still remeber MobileMe and the eventual iCloud downtime).

Anyway, I am quite surprised by some of the latest articles, particularly from Ina, on Re/Code. I sure hoped for more quality writing and editorial process… This narrow viewed article, with this poor way to present ideas represent a type of journalism that doesn't just inform the facts, but give them a twist to some, as of now, unclear end!

Dorkus Maximus
Dorkus Maximus

What a morally bankrupt way to look at the world. 

dandare003
dandare003

Content is still king and one can argue that some Smart Phone buyers are drawn to exclusive Apps and or high quality Apps and Apple maintains that important distinction.  Developers make much more money and are more successful catering to affluent Apple Customers than they are with the much more price sensitive less affluent android customers.  Developers find it much easier developing apps for IOS because everyone upgrades to the latest IOS. Developing for multi-version android devices is an headache.  For this reason I don't think market-share is an issue right now.


Apple can also grow iOS share through licensing their software to handset users, putting iTunes on the Google Play Store.


If the difference between the experience (apple v Samsung) ever becomes marginal for customers both in terms of software and hardware - currently moving in that direction developers COULD see more $$ in the much larger marketplace/ base of Android users. If for example, you can develop a .99c app to 100 million Andrioid users versus 50 million IOS - you might start looking at economies of scale than profitable niches.  

Steven Klein
Steven Klein

Question for Ina Fried: Would you rather have twice as many readers, or twice your current salary?


For those comparing Samsung total revenue to Apple total revenue: Given that both companies sell lots of non-phone products, does such a comparison make sense? Do iMac computers compete with Samsung refrigerators? Of course not!


So what happens if we compare Samsung phone sales and revenue to Apple phone sales and revenue? We find that Samsung sells twice as many phones, but Apple generates twice as much profit.


So far as I know, market share cannot be used to pay suppliers, nor to pay employees, nor distributed to shareholders.

JBF
JBF

I wish Apple would get the iWatch to market more quickly. Both Google and Samsung have declining growth rates. They need to get copying the iWatch as soon as possible.

MidtownGuy
MidtownGuy

Sorry, I don't get it. To me, it's like comparing Porsche to Volkswagen: both make cars, it's true, but for entirely different markets. Both are great in their own right, but to try and measure how they compete with each other is pointless.


Market share? Volkswagen cares, Porsche doesn't. Profit margins? Sure, but Volkswagen would rather you concentrate on total profit, not profit per car. The Samsung phones are terrific for what they do, but to say, "They already won" is silly. (Unless the point is that without "iphoning" their phones, Samsung would be like Nokia right now.) Apple (like Porsche) is more interested in keeping their products competitive for a different demographic altogether. Less items sold. More profit per item sold.


Why don't people get that?

apppletini
apppletini

Apple takes in almost ¾ of all the profits, while Samsung, with soooo many more phones, scraps up the crumbs left by Apple. Some "winner".  

thismarty
thismarty

The problem with market share is that you can't put it in the bank.  That's why many successful businesses and their shareholders prioritize attaining higher profit margins (which are money) instead of market share (which isn't money).


Ina would do well to inform her readers that Apple is trouncing Samsung on margins and profit.

gwold
gwold

Market share does not equal profit share.

stsk
stsk

Good one, Ina, and demonstrates dramatically why Koh is a complete tool (in both senses), and the US judicial system, like the legislative and executive branches, are nothing but toothless pawns of oligarchy.


It's amazing to me that you were able to get editorial approval for this, however, since one of the principal owners of this site wakes up next to someone who works for Google and has seemingly turned the site into the public relations arm of that company. (see "Can Android Conquer the U.S." for evidence.) Of course, I forgot the possibility that the title could be read as "Hooray, Regardless of Latest Verdict, Samsung Has Already Won The Battle With Apple", rather than as "Regardless of Latest Verdict, Samsung Has Already Won The Battle With Apple - Justice Loses Again."

shm224
shm224

@Steven Klein  : Sure, the market share in itself doesn't pay suppliers, but their growth does. 


As Ina indicated in her article, Samsung's marketshare grew from about sub-10% to what it is today.  Apple's profit share in global mobile market has in the meanwhile declined from 75% in 2011 to about 55% today. Samsung's annual profit from mobile devices increased by 30% last year -- vs 15% for FY2013 .  Both companies now depend on mobile device sales for much of their revenue and profit. 


shm224
shm224

@JBF  : don't count on it.  Samsung is a "fast follower" -- or in this case, has been making wearable much longer than Apple has.  Their first smart wrist-wearable was released in 1999, Samsung's most recent wearable product, the Gear, is their 3rd generation. 


-- Our objective has never been to be first. It’s to be the best, Tim Cook -- 


shm224
shm224

@apppletini : it's more like 6/4 on annualized basis. Apple's revenue/profit is higher on Q4 and Q1; then they steadily declines until the next iphone release. Samsung's revenue/profit is higher on Q2 and Q3 and they are on track to match or surpass Apple's profit this year.

shm224
shm224

@gwold : Sure, not always, but it's certainly true for Samsung.

shm224
shm224

@stsk : not sure why you are being so critical of the executive branch -- Obama reversed Samsung's ITC import injunction on Apple last year. That's first veto in nearly 30 years. The US Congress also passed a patent bill that favors Apple's design patents -- eg,Patent Law Treaties Implementation Act of 2012 which was introduced in August of 2012, right before the first Apple-Samsung trial started and passed into law in Dec of 2012 by Obama.

apppletini
apppletini

@shm224

"Samsung's revenue/profit is higher on Q2 and Q3 and they are on track to match or surpass Apple's profit this year."


Did you make that up? Samsung just announced  it expects to see only a "slight increase" in demand when compared to the same period in 2013. 


So if they were already making only half of what Apple has been making, a "slight increase" will NOT surpass Apple. 

stsk
stsk


@shm224 @stsk It was a broadside, not a rifle shot. The points you make are exceptions, not trends. Is the executive branch WORSE than the legislative or judicial? No. Is it BETTER? Marginally, even under Obama, but my broadside wasn't limited to the current executive, and prior administrations DEFINED cronyism.

shm224
shm224

@apppletini @shm224 : umm.. ooookaay..  not sure what your point is..

As I stated earlier, 2Q and 3Q are Samsung's best quarters and Apple's worst quarters.  Samsung's profit will match or surpass Apple's profit during these two quarters -- unless they change their iphone release dates.


shm224
shm224

@Steven Klein @shm224 @stsk @apppletini   not necessarily. Much of both companies' revenue and profit now comes from mobile sale -- and have been for the past 3-4 years.


According to both companies most recent earning reports, Samsung IM's sales accounts for some 60% of Samsung Electronic's entire revenue or almost 75%; Apple's figures as similar to Samsung's. 
Further, the link you cited is highly misleading in that it compares Apple's best quarters, 4Q, against Samsung's worse quarters. Apple's sales is highly seasonal and, for 1Q, the profit share was 42 vs 58, not twice as you falsely insinuated.

Steven Klein
Steven Klein

@shm224 @stsk @apppletini  Given that Samsung sells lots of non-phone products (like refrigerators), and Apple sells lots of non-phone products (like iMacs), does it make sense to directly compare total revenue?


Wouldn't it be more useful to directly compare sales and profits from their phone businesses?


According to this estimate, Apple's phone business earns more than twice the profit of Samsung's phone business: http://www.businessinsider.com/apple-smartphone-profit-share-2014-2

shm224
shm224

@stsk @shm224@apppletini : sigh, I guess most people here aren't financially or mathematically literate.

Samsung made $7.3B net profit in 1Q of 2014 -- that's also one of the most profitable quarters in Samsung's corporate history.  Yes, it's down -3.3% YoY, but that comes after almost 7 consecutive record breaking profit quarters in the past two years.

Apple made $10B net profit in the same quarter.

Now, if you know anything about math, that comes out to 42/57 -- and Q1 is Samsung's slowest, pre-release quarter.

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