Samsung’s smartphone sales surge… at Apple’s expense?

The never-ending struggle between Apple and Samsung has taken a new turn, with the latter reporting a far more successful than expected fourth quarter in 2012. Sales and profits both surged, and analysts believe that to be a direct result of the underwhelming launch and initial sales velocity for Apple’s iPhone 5. Did the newest smartphone from 1 Infinite Loop drive prospective customers straight into the arms of its competitors?

In the Q3 2012 earnings announced today by Samsung, estimated operating profits surged by an amazing 89-percent, to reach a new quarterly high of 8.8 trillion Korean won (Roughly $8.3 billion U.S.). Sales also rose 18-percent to 56 trillion won, mostly driven by the demand for the company’s Galaxy Note II and Galaxy S III phones. The results are all preliminary, however, and the Korean manufacturer has not released net income or divisional figures.  

Bloomberg Businessweek surveyed analysts to discuss this surge, and the consensus was that the earnings at the company’s cellphone division most likely doubled when compared with the same period in 2011. One of the analysts, James Song of Seoul’s Daewoo Securities Co., claimed that Samsung’s success was due to more than just good hardware though.

“Samsung was the major beneficiary of slower-than-expected sales of Apple’s iPhone 5,” Song said, adding that the company’s “biggest challenge ahead [would be] whether it can maintain its competitiveness in the smartphone market as [more] high-end products are expected to be released by big players like Apple and Google.”

Samsung’s bump at Apple’s expense is likely to feel particularly sweet at the former company, as well as sting particularly harshly for the latter. After all, relationships between the two companies have hardly been cordial of late, despite Apple remaining Samsung’s biggest customer. Both companies have been locked in litigation in multiple countries since April 2011, concerning alleged patent infringement on both sides (Apple issued the first lawsuit, with Samsung counter-suing a week later; at this point, the running total for lawsuits between the two over the topic now numbers somewhere in the region of 50, across more than ten different countries). Currently, neither side has a particular advantage; Apple has won legal victories in the U.S., Samsung has managed to do the same in the U.K., Japan, and South Korea.

In a side-by-side sales comparison, Samsung is believed to win the battle of the smartphones worldwide with 62 million smartphones sold internationally in the final three months of 2012, compared with 45 million for Apple. Some point to the upset surrounding Apple’s faulty Maps app – and subsequent public apology – as one significant reason why sales on the latter failed to meet expectations.

Whether or not Apple can make up lost sales ground with the iPhone 5 remains to be seen, as does Samsung’s ability to continue to push its Galaxy smartphones even harder in the U.S. to give them a significant presence in this market. One thing is for certain, however: this news isn’t likely to improve relations between the two companies.

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