Samsung Tops Apple as World’s Most Profitable Cell Phone Maker

Jacob Harper  |

Apple Inc.’s (AAPL) once the pioneer and unquestioned world leader in smartphones, just got taken down a peg. According to analytical firm Strategy Analytics, in the second quarter of 2013 Samsung (SSNLF) posted an operating profit on their mobile division of $5.2 billion while Apple posted $4.6 billion.

While analysts were pleased with Apple’s take, and especially surprised by the fact that Apple beat iPhone sale expectations by 5 million, Samsung’s number indicate that the market for high-end phones might be slipping.

This is most prevalent in emerging markets like China. In that country Apple competes not just with Samsung but also private Chinese phone giant Huawei, who in 2002 became the largest telecom company in the world. Samsung now has 19 percent of the Chinese smartphone market compared to Apple's nine percent.

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While Apple has long been the "gold standard" of high-end, Samsung is amking moves into that marlket in China as well, and taking advantage of the fact they have three times as many retail outlets in the country than Apple does. Samsung recently debuted a high-end smartphone in China called "Heart to the World" that is coveted by China's upper class.

Samsung’s mobile profits represented a 52 percent increase from a year ago. Meanwhile, Apple moved 31.2 million iPhones this quarter, which beat analyst expectations, but still represented a 16 percent drop from the previous year. According to Strategy Analytics, Samsung now has 33 percent of the entire global smartphone market, compared to Apple's 13.2 percent.

Samsung released the Galaxy S4 in April to generally positive reviews, spurring second quarter growth and sales for the South Korean company. Apple has not debuted a new iPhone since September 2012. And while CEO Tim Cook hinted that “exciting” things were forthcoming for Apple in the third quarter, he provided no concrete details or release dates.

Despite losing the presitgious spot as the world's most profitable handset maker, Apple is still enjoying a stock surge following their still impressive Q2 2013 earnings report. Apple is up .21 percent 10.16 percent on the month to hit $439.32 a share.

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