Can Samsung keep the pressure on Apple?


Sales and profits were down for Samsung in Q2 and with the imminent arrival of the iPhone 6, Paul Withers looks at whether the Korean manufacturer can maintain its dominant market position

The second half of the year is shaping up to be a rather interesting period in the handset manufacturing stakes, with Apple rubbing its hands together in anticipation and its rivals feeling the pressure.

Apple hasn’t released a handset in nearly a year while all of its rivals have been firing out their respective flagship devices. However, this hasn’t stopped these competitors from posting disappointing sales and profit results.

Market leader Samsung said last month that sales were down by 21 per cent year-on-year to Won27.5 trillion (£15.9 billion) in the April-June quarter, while profits fell by a fifth to Won6.25 trillion (£3.6 billion).

According to analyst IDC, Samsung’s shipments decreased 3.9 million from last year to 74.3 million units, with its market share falling by almost a quarter to 25.2 per cent.

This is despite Samsung releasing its flagship Galaxy S5 device near the start of Q2 on April 11, as well as the release of several additions to its Galaxy portfolio over the course of the past 12 months.

HTC, albeit not a direct competitor to Apple at the top of the smartphone tree, saw numbers slump in July. Sales fell by by more than half sequentially to TN$10.605 billion (£210 million) – its lowest for five months. They were also down by 32.58 per cent from a year earlier.

The Taiwanese firm had forecasted revenues of between TN$42 billion (£831 million) and TN$47 billion (£930 million) for Q3, so it appears it still has a lot of work to do to reach that target.

What made it all the more disappointing for HTC was that it had returned to profitability in the April-June period. It made a net profit of TN$2.3 billion (£45.5 million) compared to a net loss of TN$1.88 billion (£37.2 million) in the previous quarter.

Apple on the other hand saw iPhone sales rise 13 per cent year-on-year in Q3 to 35.2 million units, while profits increased 12 per cent to £4.5 billion. This is all despite Apple only releasing two smartphones in the past year – the iPhone 5s and 5c – both of which debuted last September.

With this in mind, and with the rumoured launch of new iPhones on September 9, followed by a possible release just 10 days later, Apple can look forward to Q4 with much optimism.

In the last three months of 2013, Apple sold 51 million iPhones – an all-time quarterly record, while profits remained flat at $13.1 billion (£7.9 billion) from the year before. If it can follow that line again this Q4, if not better it, Apple will be well satisfied.

However, you can be almost guaranteed Samsung still has something left in its locker for the remainder of the year. An invite to its latest “Unpacked” event at IFA in Berlin on September 3 points towards this.

The manufacturer has traditionally used its Unpacked events to make significant and high-end additions to its smartphone line-up.

In an earnings call to discuss its Q2 results, Samsung senior vice president Kim Hyun-Joon revealed it plans to launch two high-end smartphones during the remainder of this year, so look out for these in a few weeks.

It all points to a fascinating Q4 and a pivotal time in the handset manufacturing space. Apple iPhones will no doubt sell in their tens of millions in the quarter, so its rivals, in particular Samsung, are under pressure to restrict Apple’s acceleration and combat this with their own innovative products.