Samsung's Third Quarter Sales Lead Over Apple iPhone Is No Big Surprise

By Wayne Rash  |  Posted 2011-10-29 Print this article Print

News Analysis: Samsung's sales lead over Apple is a predictable outcome of having more devices for sale in more places at generally lower prices. But that lead may prove to be short lived.

For the third quarter of 2011, worldwide sales of Samsung Android phones have outpaced sales of Apple iPhones, according to this Reuters report on market research from Strategic Analytics. Samsung's sales strength may help explain Apple's frantic attempts to attack Samsung in court, but this should be no surprise to anyone. Samsung, quite simply, is doing something that Apple can't. It's selling inexpensive smartphones.

This isn't to suggest that all of Samsung's phones are cheap, because they're not. While the Samsung Galaxy S II, costs slightly less than the Apple iPhone 4S, it isn't cheap enough to make a huge difference, but it's comparable. However, unlike the iPhone 4S, the Galaxy S II was being sold in the third quarter. This means that Apple had only the old iPhone 4, while Samsung had the Galaxy S and S II and a host of other Android phones at all price points. And that's just part of the difference.

Another reason for Samsung's third-quarter charge to the lead is market anticipation of the arrival of a new iPhone. While it wasn't clear until shortly before the iPhone 4S was released what Apple was announcing, most potential customers were hoping for an iPhone 5.

This meant that they held off buying a new iPhone until the announcement, which happened in October. This meant that sales took a hit at the end of the third quarter as customers held off buying iPhones. But while there's never a single explanation for sales surges such as the one just reported it comes down to the apparent conclusion that iPhone sales slowed slightly, but Samsung kept selling.

Pricing on the phones also explains a lot. Like Apple, Samsung sells into a global market. But unlike Apple, Samsung sells a lot of phones that cost a lot less than the iPhone and this is a huge factor in much of the global sales area where people simply can't afford an iPhone, but still need the computing power that a smartphone provides.

While it may come as a surprise to many U.S. smartphone customers, the market distortion that occurs because mobile service carriers subsidize smartphone pricing in the United States and some parts of Europe doesn't exist elsewhere.

In most parts of the world, customers have to buy the smartphone at full price and as anyone who has tried to buy a phone without a contract knows, that can be expensive. Worse, the prices in the United States with or without subsidizes, are lower than elsewhere. It's not uncommon for iPhone prices to exceed $1,000 in some international markets.

Wayne Rash Wayne Rash is a Senior Analyst for eWEEK Labs and runs the magazine's Washington Bureau. Prior to joining eWEEK as a Senior Writer on wireless technology, he was a Senior Contributing Editor and previously a Senior Analyst in the InfoWorld Test Center. He was also a reviewer for Federal Computer Week and Information Security Magazine. Previously, he ran the reviews and events departments at CMP's InternetWeek.

He is a retired naval officer, a former principal at American Management Systems and a long-time columnist for Byte Magazine. He is a regular contributor to Plane & Pilot Magazine and The Washington Post.

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