The mobile phone market is abuzz with news that Samsung has become the global leader of smartphones as well as handsets, based on first quarter information polled from the vendors themselves. Q1 results in the handset category indicate that Samsung has taken the top spot away from Nokia after a 14-year reign. And, in the smartphone market, Samsung surpassed Apple, beating iPhone's 24 percent with an impressive 31 percent market share.
With winning devices such as the Galaxy Note, Google Nexus, Droid Charge, and Galaxy S II, Samsung smartphone shipments rose by a whopping 253 percent to 44.5 million, while handset unit shipments totaled 93 million. That's a 36 percent spike from the first quarter of last year. The Galaxy S II and Galaxy Note have been especially popular, contributing significantly to Samsung's growth in the smartphone category.
In comparison, Nokia's handset market share fell annually from 30.4 percent to 22.5 percent, while its smartphone market share plummeted from 23.5 percent to 8.25 percent. The results leave Apple and Samsung together controlling more than half the smartphone market.
Overall, the handset market grew by a modest 3 percent while the smartphone market grew by a more substantial 41 percent, compared with the first quarter of 2011.
How Has Samsung Prevailed?
We spoke at length with Alex Spektor, Associate Director of research firm Strategy Analytics, about Samsung's latest success increasing market share.
"Just five years ago, Samsung took the No. 2 spot from Motorola, and at the time, it seemed like it was impossible for anyone to overtake Nokia," Spektor said. "But times have really changed. The smartphone market took off and Nokia was not able to react to the market quickly enough."
Spektor points out that the historic leaders in the smartphone market have been Nokia as well as RIM, with the ever-popular BlackBerry. "They already had a strategy and market position and a product portfolio. When you already have something in the market, you are playing defensive games, as opposed to Samsung, who really went on the offensive for the past few years, which enabled them to move with the trend."
The Android Factor
We asked Spektor how Samsung's embrace of the Android platform has contributed to its recent success.
"Android gave Samsung a quick opportunity to get as close to functionality of the iPhone as possible. The application ecosystem grew very quickly and the user interface was strong. It provided a good browsing experience and a good touch experience, which really enabled Samsung to offer a strong alternative to the iPhone."
Samsung also offers some Windows Phone devices, and outside the U.S., it also sells its own Bada platform. "For now though, Samsung is leveraging Android to the extent it can."
With regard to the probability of Samsung embracing Windows 8 for tablets, Spektor points out of course that Samsung is also in the computer business. "They play in the netbook space and the smartbook space. Once Microsoft delivers Windows 8, I don't see why Samsung wouldn't want to participate in that ecosystem."
Flood the Market Strategy
Some say Samsung has "flooded the market" with new devices, wondering if that strategy has been beneficial, in contrast for example to Apple's iPhone.
Indeed, Spektor said, Samsung has "been very good at building a brand around the Galaxy name, with roughly a cadence of around a year for each update." That not only builds awareness among consumers, it also creates anticipation. "Consumers have come to expect the new iPhone every year and Samsung users and intenders [likely purchasers] are also anticipating the next iteration of the Galaxy."
Samsung, he said, has been careful not to flood the market with so many devices that it causes confusion. "They have organized them under a single umbrella brand. If you just flooded the market with devices that have no unifying brand, that makes it challenging to consumers."
How do Samsung's Galaxy devices compare with Apple's market-leading iPhone? Spektor suggests, "The specs of the high-end smartphone tend to be broadly the same, with multiple cores and the capacity for a lot of flash memory. It's really the screen size that differentiates, and where the market starts to gain momentum."
We asked if he anticipates Apple increasing the screen size in its next iteration of the iPhone to catch up to rivals.
"Apple usually allows time for the market to build. They started with a 2G iPhone and now the anticipation is there will be enough coverage to offer a 4G LTE iPhone this year. At this point, the iPhone's [3.5-inch] screen size is essentially 5 years old and falling behind more global trends, so there is a bit of pressure on Apple to increase the size. 2012 seems a good time to do that."
In this fast-moving, highly competitive market, there's obviously no time to rest on one's laurels. Litigation over patents between Apple and Samsung are ongoing and could have an effect.
"It depends on what rulings are made and how they are enforced," Spektor said. "But, lawsuits have an impact on time and money, and definitely drain resources from all these companies."
Nokia's partnership with Microsoft could also offer a significant boost for Nokia's overall position. "The challenge for Nokia," Spektor suggests, "is that its Symbian volumes are falling very quickly and the Windows volumes aren't ramping up fast enough to offset that. What will be important for Nokia is to bring out lower-priced Windows phones for emerging markets and prepaid markets around the world."