Yesterday Samsung warned of a steep decline in profits for Q3 2014. Some of that is believed to be due to increased competition on the low-end from Huawai, Xiaomi, and other manufacturers. Consider this, however — prior to September 2014, Apple had 0% of the over 4-inch phone market. Now they've launched the 4.7-inch iPhone 6 and 5.5-inch iPhone 6 Plus and have sold into the tens of millions by now. Whatever share of the over 4-inch phone market Apple has next quarter, and next year, it will be significantly higher than zero. Here's what Samsung had to say, via Android Central:
Samsung says that it expects to make 4.1 trillion won, or $3.8 billion, in operating profit for the quarter ended September 30, roughly a 60 percent decline from the same quarter a year ago of 10.2 trillion. Similarly, sales were also down, coming in at 47 trillion won, or 20 percent less than a year ago.
Apple also has 0% share of the under $400 phone market, so they're mostly immune to competitors in the budget space. People who want and buy iPhones don't typically consider price to be the most important feature. Apple has significant share of the lucrative over $600 phone market. What share Samsung had was likely heavily waited towards big and bigger phones.
The presumed Galaxy S6 likely won't debut until next spring. However, Samsung is about to launch their Galaxy Note 4. Last year when they launched the Galaxy Note 3, there was no equivalent iPhone in the same size class for them to compete against. This year there's the iPhone 6 Plus.
The question the next set of quarterly earning reports will answer is — As much as Huawei, Xiaomi, and others will further sap profits from the low and middle end, how much is Apple going to take from the high-margin high end?
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