Image via CrunchBase
After surging past Apple in the global smartphone market in Q3 2011, Samsung produced yet another strong display when it announced its December 2011 ending earnings last week. [1]
Samsung has grown so quickly in the mobile phone market in the past year that its handset division has now become its most profitable business. We can gauge this rapid rise from the fact that Samsung’s global smartphone market share has increased from a mere 9% in Q3 2010 to 24% in Q3 2011 while Apple, Nokia and Research in Motion have all found themselves at the receiving end. [2]
Our $500 price estimate for Apple stock is about 20% above market price.
See our complete analysis of Apple here
iPhone 4S success may not be enough
When Samsung overtook Apple in the smartphone market for the first time in Q3 2011, many analysts believed that it was a one-off incident for Apple and blamed it on the iPhone 4S’ launch delay. They believed that with iPhone 4S being launched in October 2011, Apple should come up with strong Q4 results and take back the #1 position in the smartphone market. Apple is expected to announce its December 2011 ending quarter results in the second half of January.
We believe that in spite of the success of iPhone 4S, it will not be enough for Apple to catch up with Samsung’s market share. Samsung has already captured around 24% smartphone market share compared to 15% for Apple as of Q3 2011. [1]
Secondly, the advantage with Samsung is that it keeps coming up with new smartphones to keep a novelty factor and give customers a broader choice of options. A few weeks back, it launched Galaxy Note mobile device (which runs on fast fourth-generation (4G) networks), adding to the flagship Galaxy lineup of products.
Apple needs much more for a comeback
We believe that the only way for Apple to make a comeback is to come out with newer versions of the iPhone at a faster rate and bring new hit features like Siri to its new lineup. However, given its history, Apple takes its time to come up with newer versions of iPhone.
For example, it was late in coming out with iPhone 4S in October last year, which was 16 months after the launch of iPhone 4 in June 2010. Waiting 16 months is a long time time considering how competitive the smartphone market has become, and we dont expect the next version of the iPhone to take this long.
Understand How a Company’s Products Impact its Stock Price at Trefis
Notes:
- Smartphones power Samsung to record Q4 profit, Reuters, January 6th, 2012 [↩] [↩]
- Strategy Analytics: Samsung Becomes World's Number One Smartphone Vendor in Q3 2011, October 27th, 2011 [↩]
Like our charts? Embed them in your own posts using the Trefis WordPress Plugin.
