January 29, 2015 09:31
Apple now dominates the global smartphone market after rival Samsung lost market share last year, a shift clearly evident in fourth-quarter earnings announced Wednesday.
Apple posted record revenues, profits and smartphone sales volume in the last three months of 2014, widening its lead over Samsung. Sales were a record US$74.6 billion in the fourth quarter of 2014, up 29 percent compared to the previous record in the fourth quarter of 2013, and net profit was $18 billion, up 37 percent.
iPhone sales volume totaled a record 74.5 million units, up 46 percent on-year, compared to predictions of just 66 million iPhones sold.
◆ Larger Screens
The larger screens of the new iPhone 6 seems to have played a key role in Apple's stellar performance. Samsung and LG both rolled out smartphones with five-inch or larger monitors, but Apple had previously stuck to four-inch screens due to the wishes of company founder Steve Jobs.
But this year Apple relented under the leadership of CEO Tim Cook and the new iPhones have 4.7 and five-inch screens. Cook's bold decision paid off handsomely. Consumers loved the large-screen iPhone 6 and 6 Plus. Sales in China in particular grew 70 percent compared to 2013 to $16.1 billion.
Apple achieved record earnings even though local rivals Xiaomi and Huawei rolled up premium smartphones at rock bottom prices. U.S. sales also grew 23 percent to $30.6 billion. Cook told investors that the number of Android users shifting to the iPhone in the fourth quarter was the highest in three years.
The downside to Apple's stellar earnings is the company's heavy reliance on a single product. In fact, 69 percent of Apple's profit stems from the iPhone, and although iPhone sales remain strong, those of the iPad have plummeted.
Apple sold 21.4 million iPads in the last quarter, down 21 percent on-year. Analysts said customers no longer feel the need to buy iPads or other tablet PCs now smartphones have bigger screens.
◆ Samsung's Troubles
Samsung by contrast faces an increasingly tough environment. The Korean electronics giant managed to return operating profit back to the W5 trillion range thanks to solid semiconductor sales. But its smartphone sales are still languishing (US$1=W1,085).
Analysts expect Samsung's mobile division to have posted an operating profit of less than W2 trillion in the fourth quarter last year. Although that is an improvement over the W1.75 trillion in the third quarter, it only amounts to 1/10 of Apple's.
Once a contender for the No. 1 spot, Samsung now has to focus on maintaining market share amid fierce competition from Chinese players. It already lost its No. 1 spot in terms of sales volume in China to Xiaomi.
Samsung has rolled out a low-priced smartphone in India that costs less than W100,000 and contains the company's home-grown Tizen OS. But market research shows that it lost its No. 1 spot there too to local rivals.
A Samsung executive admitted, "We developed too many models in order to respond to diverse individual needs, and our pursuit of adding non-core functions ended up producing poor results." The plan now is to return to its premium roots with the Galaxy S6.
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