Samsung Is US Handset Leader, But Does It Make Money?

Samsung had more market share of the US handset market than any other manufacturer in the three months which ended in November. The figure was 25.6% according to Comscore, up .3% from the previous three months. Samsung may be the market leader, but the profits from that lead may be small, and perhaps nonexistent.

Apple’s (NASDAQ: AAPL) market share was a much smaller 11.2%. That was up 1.4 points from the previous three months, probably because of the new iPhone 4S.

The primary differences between Apple and Samsung include the fact that Samsung makes cheap handsets that are not smartphones. Samsung makes smartphones as well, but it does not have a product line like Apple’s iPhone. Every Apple handset is a smartphone. Smartphones sell for much more than low end cell phones do.

The second difference is that Apple makes a much larger profit than Samsung does because Verizon’s and AT&T’s appetites for Apple iPhones is so hight. Canaccord Genuity claims Apple had more than half the handset industry operating profit last year. That leavse the balance to giants Samsung, LG, and Nokia. That is not much black ink to spread around.

Samsung’s lead in the US handset market may cause some to believe that Apple has lost its touch. When smartphone market share and industry profits are measures, first place does not look so attractive.

Douglas A. McIntyre