Decreasing Profits
According to industry sources, Samsung Electronics topped the smart phone sales volume charts of 14 out of the 15 countries which showed the most rapid market growth in the industry in the third quarter of this year. Specifically, the company sold a total of 83.8 million smart phones worldwide in the third quarter, accounting for 23.7 percent of the global market to be second to none.
Its profitability remained at a low level, though. The Mobile Communications Division of Samsung Electronics recorded an operating profit ratio of 14.7 percent in the third quarter of 2014, but the percentage dropped to 9.0 percent a year later.
On the contrary, Apple’s operating profit ratio amounted to 28 percent between July and September this year, when 94 percent of the profits of the global smartphone market went to the single company of Apple. This can be attributed to an increase in the average selling price of the iPhone from US$620 to US$670 between 2014 and 2015. During the same period, that of Samsung smartphones was equivalent to 27 percent of the iPhone’s. In the second quarter, Apple earned approximately US$184 with each iPhone, while Samsung Electronics gained a profit of just US$33 per unit.
This difference is because Samsung is focusing on the mid-end market. It recently announced that it would adhere to its strategy for ensuring profitability and market share by means of flagship and mass-market models, respectively.