Samsung results could slice into Apple profits
With every successful new product, the South Korean company encroaches on the iPhone maker's territory.
Samsung is expected to announce another record quarter when it reports at the end of July. But will the company's success come at the expense of Apple (AAPL), Nokia (NOK), and Research in Motion (RIMM)?
It's no secret that the South Korean electronics manufacturer has had a negative impact on its competitors. This is heavily due to its implementation of the Android mobile operating system from Google (GOOG), which the company uses to power all of its phones.
Samsung's latest major release, the Galaxy S III, has propelled the tech giant's operating profit this quarter. According to The Register, Samsung is projecting that its second quarter operating profit will rise 14.5% from the previous quarter and 79% from the same quarter last year. Second-quarter operating profit is expected to be 6.7 trillion won, or $5.9 billion.
Second-quarter results could have been even higher. Supply shortages affected sales of the Galaxy S III worldwide, Samsung claimed, noting that worldwide demand has been much greater than anticipated.
Last month, Samsung announced that it expected Galaxy S III sales to reach 10 million in July. This is a far cry from the 37 million iPhones that Apple sold during the iPhone 4S' first quarter. But with every successful new product, Samsung encroaches on Apple's territory.
In just five months, Samsung shipped five million Galaxy Notes, abolishing expectations. With a larger-than-normal 5.3-inch screen, Samsung was not expected to sell a significant number of units. But consumer demand proved to be quite large.
Last Spring, research from Gartner (IT) suggested that Apple will maintain its healthy lead in the tablet market. But Samsung is gaining on Apple in every other regard. As Samsung's market share continues to rise globally, Apple's market share has declined in Europe.
Apple sold 35.1 million iPhones during the second quarter -- just 1.9 million less than the previous quarter. However, while third-generation iPad sales are expected to rise in the third quarter, some analysts believe that iPhone 4S sales will continue to fall.
Inevitably, some consumers will hold off on making a purchase until the iPhone 5 is released. Even if the iPhone 4S was the last iPhone ever produced, high sales could not be sustained forever. Eventually, the market will peak.
Samsung will attempt to convert as many consumers as possible in the months leading up to the next iPhone. In a few short weeks, investors will learn how successful Samsung has been in this regard.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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