Apple 2.0

Covering the business that Steve Jobs built

Samsung overtakes Apple in smartphones, trails in profits

October 28, 2011: 8:08 AM ET

Even with 40% fewer unit sales, the iPhone generated 3 times more profit

Source: Strategy Analytics

Apple's (AAPL) reign as the world's No. 1 maker of smartphones, it turns out, was like the life of a grasshopper: It overtook Nokia (NOK) in June and was overtaken by Samsung in September.

Strategy Analytics reported Friday that Samsung either shipped or sold (accounts differ) 27.8 million smartphones last quarter, easily outpacing the 17.07 million iPhones that Apple sold in the same period. Even if Apple sells 25 to 30 million iPhones in the holiday quarter, as various analysts predict, Samsung is likely to retain its lead.

But unlike the grasshopper, Apple is in it for the long run. It's selling iPhones as fast as it can make them and socking away more profit than all of its competitors combined (see here).

Samsung, for example, reported profits of $2.2 billion from smartphone sales last quarter, 60% of the electronic giant's total.

iPhone sales last quarter, while less than expected, generated revenues of nearly $11 billion (39% of Apple's total). Assuming, conservatively, 60% profit margins on each iPhone sold, that's an estimated profit of $6.5 billion, leaving No. 1 Samsung in the dust.

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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