Samsung passes Apple to Become the Most Profitable Smartphone Manufacturer

Apple revealed its third-quarter profits today. The Cupertino giant reportedly made $6.9 billion in profits, which makes it number two, and puts it behind Samsung’s estimated $8.3 billion in profits in the same quarter. The interesting aspect, however, is that last year, Apple made $8.8 billion in the same quarter.


This is for the first time that Samsung has surpassed Apple to become the most profitable smartphone manufacturer in the world. Though the statistics reflect only the last quarter, they still hint at Samsung’s increasing dominance in the smartphone segment.

The strange fact is that, despite the low profits, Apple sold more smartphones (31.2 million) in the current quarter than it did in the same quarter the previous year (26 million). Though Apple didn’t make the numbers official, it’s possible that older versions of iPhones could have sold more than Apple’s iPhone 5. Perhaps, that explains the decline in profits and increase in sales of smartphones.

Samsung, on the other hand, sold a record 71 million handsets in the current quarter. The boost in sales is expectedly due to Galaxy S4’s increasing demands and Samsung’s strong, varied lineup of ‘Galaxy’ devices.

Apple, on the contrary, has not launched any new device in the last quarter. Apple’s business model is quite different from Samsung. Apple relies heavily on its flagship device every year, and the previous generation smartphones to do the business. Samsung, on the other hand, caters to a very large audience by developing smartphones with different forms and features.

Apple would probably be launching the ‘iPhone 5S’ in September, which should give a massive boost in sales and hopefully, revive the ‘below-par’ profit margins for the next quarter. There are also talks that Apple would be launching an ‘iPhone lite’, a mini, economic version of iPhone, that would help it capture smaller markets, where Samsung seems to have a strong foothold.

Though Samsung’s profit numbers are yet to be audited, it’s very unlikely that they would drop below Apple’s $6.8 billion margin, as 20-25% decline in the projected profit margins is preposterous. We would have to wait for the numbers to finally show up, but it’s well-assured that Samsung would be leading the race.