Apple is widening its lead over rival Samsung in the global smartphone market, boosting revenues and net profit while Samsung suffered lackluster sales, especially in China and other emerging markets.
The Korean electronics giant managed to pull off higher revenues since it operates a wider range of business, but the U.S. company makes much more profit per phone sold. Apple is the most profitable company in the IT industry even though it has only a small lineup of products consisting of smartphones, tablet PCs and personal computers.
◆ Chinese Market
Apple's second-quarter sales totaled US$37.4 billion, a record for the quarter, and net profit $7.7 billion. Sales were up six percent and net profit 12 percent compared to the same period last year.
In contrast, Samsung's earnings fell below expectations. Its preliminary quarterly sales fell 9.5 percent on-year with W52 trillion (US$1=W1,024), and operating profit also dropped 24.5 percent to W7.2 trillion.
Samsung managed to catch up with Apple in terms of net profit during the second quarter of 2013 but dropped behind over the next three quarters. Taking the smartphone performance only into account, the gap is even larger.
Earnings in the Chinese market were the decisive factor. Apple saw iPhone sales in China rise 48 percent on-year during the April-June period, probably thanks to a deal it struck in late 2012 with China Mobile, the world's biggest telecom provider with 780 million subscribers.
In developing powerhouses Brazil, Russia and India as well as China, iPhone sales rose 55 percent.
Samsung did not fare so well in China. Apple dominated high-end smartphone sales, while Samsung faced intense competition from local rivals Xiaomi and Huawei that marketed similar products at half the price.
◆ Competition Ahead
Apple is expected to see earnings improve further in the second half of this year since it usually releases new iPhones in the third quarter. Apple's sales usually slow in the second quarter and rebound in the third and fourth.
The Wall Street Journal reported that Apple is preparing to roll out smartphones with 4.7 and 5.5-inch screens. The daily added Apple plans to produce between 70 and 80 million units for initial orders, up some 30 percent from those for the iPhone 5S and 5C last year.
But Apple has its own concerns. iPad sales fell 9.2 percent in the second quarter to 12.27 million units due to intensified competition from Samsung and other rivals, compounded by the improved quality of low-priced tablet PCs.
Apple's decision to form an alliance with IBM is viewed as a step to deal with increased competition. Industry watchers believe Apple is betting on wearable smart devices to beat the competition.
Samsung is pinning its hopes on a new smartphone set for release in the second half of this year. Samsung has released new Galaxy S models in the first half and new Galaxy Note models in the second.