The tech blogs are abuzz with news that Samsung is now selling more smartphones than Apple, in a big win for the South Korean company's press team. Devil, meet details. The Wall Street Journal reports on the 44 percent growth, emphasize ours:
Samsung in the July-to-September period surpassed Apple Inc. as the leading seller of smartphones by shipping around 28 million, about four times the number it achieved a year earlier, in a rapid transformation of its biggest business by sales. Apple said earlier this month it shipped around 17 million smartphones in the same period.
It's certainly not bad news for Samsung that they shipped 11 million more smartphones than Apple, but it's a little too soon to break out the champagne. The Journal's report scoops Samsung's own third quarter earnings report, due out Friday, and analyst estimates focus less on the optimism over smartphone sales than they do on the dismal revenue figures. Reuters anticipates a 13 percent drop in Samsung's profits due to "a sharp profit fall from its mainstay memory chips" business due to slackening demand. The AFP is even less optimistic with their estimate at a 23 percent drop. (We'll update these numbers when the earnings report is released.) Samsung's chip business has traditionally been their bread-and-butter, and quite ironically, the company that's buying the most of them is none other than Apple, who uses their mobile processor chips in the iPhone and iPad.
On top of that, Samsung shipping a lot of smartphones to retailers does not necessarily mean that Samsung is then selling a lot of smartphones to consumers. (For an example of how shipping products doesn't equal selling products, we need look no further than the sad fate of RIM's PlayBook or HP's now extinct TouchPad.) However, The Journal also reports that Samsung is gaining market share when it comes to smartphone shipments with 23.8 percent to Apple's 14.6 percent, down from 17.4 percent. But looping back to those profit figures, we're reminded that the definition of Apple winning the smartphone game has less to do with selling more phones than it does to do with making more money. In a recent and very worthwhile Fast Company cover story, Farhad Manjoo writes:
Apple, on the other hand, makes a significant profit on every device it sells. … So despite Google's market-share lead, Apple is making all the money. By some estimates, it's now sucking up half of all the profits in smartphones.
None of this is to say that Apple's march around the globe, making billions of dollars more than everyone else while selling fewer devices, will last forever. In fact, as the never-ending wave of patent infringement lawsuits related to smartphone software that the Cupertino company has been launching against competitors, especially Samsung, it looks like Apple is duly worried about its competitors catching up. We're now living in a post-Steve Jobs world and doubts abound over whether the company can keep its edge on innovation, bringing products to market years before other companies even realize there's a market. But honestly, three cheers for Samsung's press team for spinning what appears to have been a bad quarter into dozens of stories about beating Apple at its own game.