By Adam Satariano - Jan 31, 2012 12:01 PM GMT+0700
Samsung Electronics Co. (005930) was the only smartphone maker partnering with Google Inc. (GOOG) that found holiday cheer competing against Apple Inc. (AAPL)’s iPhone.
Apple led the smartphone market in the fourth quarter after unveiling the iPhone 4S in October. Of the 9.4 million devices activated by AT&T Inc., the second-largest U.S. wireless carrier, 7.6 million were iPhones. Verizon Wireless, the largest provider, said 56 percent of its 7.7 million smartphones were iPhones. Samsung was No. 2 in shipments.
Apple sold a record 37 million iPhones globally in the three months ended Dec. 31, dispelling speculation that demand might be eroded by the dozens of devices using Google’s Android operating system. Instead, Apple’s dominance may serve as a signal that rivals such as HTC (2498) Corp. would do better to act like Hollywood studios, which hold back movies to avoid competing against the debut of a sure-bet blockbuster.
“For the Android smartphone vendors to come out with something, they need to be very brave,” said Ramon Llamas, a senior analyst at market-research company IDC. “It was Apple’s Christmas.”
Samsung found success with its Galaxy line of smartphones. Though the Suwon, South Korea-based company -- also one of Apple’s biggest parts suppliers -- came in just behind Apple for the quarter, it was the largest vendor for all of 2011, according to Strategy Analytics, a research company.
“They are clearly the winners,” said Nehal Chokshi, a senior analyst for Technology Insights Research LLC in New York.
Motorola, HTC, LG
As Apple and Samsung together sold more than 70 million smartphones in the fourth quarter, companies such as Motorola Mobility Holdings Inc. (MMI), HTC and LG Electronics Inc. (066570) were left to fight for the remaining customers.
The fallout for Apple and Samsung’s competitors can be seen in their financial results. On Jan. 6, HTC, maker of the Sensation and Incredible smartphones, reported its first quarterly profit decline in two years. Motorola Mobility, maker of the Razr and Droid devices, also said earlier this month that it expected to report results that were lower than forecast in part because of the challenging market. LG, scheduled to release results on Feb. 1, has reported two consecutive quarterly losses.
Some companies are taking a cue from Apple, whose iPhone is its only smartphone. HTC and Motorola have announced shifts in strategy to focus on fewer models instead of a swath of variations.
Different Approaches
Google licenses the Android operating system to multiple hardware makers, while Apple’s iOS software is available only on its own products. The rising popularity of devices running Android has been seen by investors as a long-term threat to Apple’s market-leading profit margins. Chokshi said a similar example is the difficulty Apple’s Mac personal-computer business had competing against Microsoft Corp.’s Windows operating system, which runs on PCs from various vendors.
Apple’s performance during the holiday quarter should ease those concerns, said Brian White, a former analyst at Ticonderoga Securities LLC, which closed last week. Sales in China will help the iPhone remain the leading smartphone, he said. Morgan Stanley estimates Apple could sell as many as 40 million iPhones in China by 2013.
“The biggest mobile Internet opportunity in the world is just a baby,” White said. “Just think about when that explodes and Apple’s exposure there.”
To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
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