Samsung continued to luxuriate in a quarter without serious iPhone competition, turning in results that impressed the markets more than Apple’s had a few days earlier.
The Korean vendor attributed almost two thirds of its operating profit to its mobile business, driven by its Galaxy smartphones. Net profit for the second quarter was up 48% year-on-year to $4.5bn, although this was actually slightly behind analyst forecasts of $4.8bn.
“Despite a difficult business environment, we achieved stable profits in the second quarter through our differentiated products and competitive technology,” said head of investor relations Robert Yi in a statement.
However, like Apple and most other mobile players, Samsung was cautious about the second half of the year because of macroeconomic conditions, especially as a rising percentage of its business comes from the troubled eurozone. Yi added: “As we move into the second half, continued fiscal instability in Europe and its effect on the global economy will result in the possibility of a slower-than-expected recovery and intensified market competition.”
Samsung said the mobile business accounted for 63% of its operating profit in the quarter. Analysts estimate it sold 52m smartphones during the period, including 6.5m Galaxy S III models. Apple reported sales of 26m iPhones.
Meanwhile, the pressure increases on Apple to stop Samsung in its tracks with a high impact new launch. Since the wait for a new iPhone hit Apple’s own quarterly results, the market is even more expectant than usual about the firm’s next unveiling. Industry consensus is now that this will take place on September 12, and the event could debut both the ‘iPhone 5’and a smaller iPad to counter the Google Nexus 7.
Amid the usual miles of column inches speculating about the features of the new handset, most agree it will have a larger screen and thinner body, as it is starting to look rather small against the Android superphones and even the 5-inch phone/tablet hybrids like Samsung Galaxy Note. If Apple does go larger, it will be the first physical redesign of its device since the iPhone 4, and the most dramatic since the original model.
That would meet criticisms that Apple has not been radical enough in rethinking its iPhone, which has been losing ground to Samsung’s Galaxy, but of course the company also has to be careful not to alienate its many loyal users, since its biggest carrier partners, such as AT&T, rely heavily on upgrades by existing customers.
Apple sold 26m iPhones last quarter, down from 35.1m in the previous three months, as consumers held out for a new model. CFO Peter Oppenheimer said on the quarterly earnings call that ‘iPhone sales continue to be impacted by rumor and speculation around new products’.
Apple may be under pressure from Samsung, which regained the global smartphone lead from its rival in the second quarter, but it is gaining on the wider Android base, at least in the US. According to researchers at Strategy Analytics, Android shipped on 56% of smartphones in the country during Q2, down from 61% a year earlier, while Apple’s iOS share was up from 23% a year before, to 33%.