How Apple, Inc. went thermonuclear on Samsung, erasing Androids primary profit center

Samsungs profit collapse was not principally due to Chinese phones flooding the market. IDC just reported in its smartphone market estimates that Samsung still leads the world in shipments and market share by a large margin, having shipped 78.1 million units, a YoY decline of just 8.2 percent.Samsung itself reported a sequential „slight growth in shipments” in its earnings release, but explained that „earnings declined QoQ as ASP decreased due to weak smartphone product mix and sales decrease put pressure on the cost structure.”

In other words, profits were down because average selling prices were down, because it was selling less profitable phones and because it was becoming even more expensive to build its most expensive phones due to a reduction in economies of scale. Removing any remaining mystery, Samsung flat out stated that its phone shipments in the quarter were „driven by mid to low-end products.”

via How Apple, Inc. went thermonuclear on Samsung, erasing Androids primary profit center.


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