Apple 2.0

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AppleInsider: Samsung has not 'dethroned' Apple in profits

July 28, 2013: 8:33 AM ET

Daniel Eran Dilger rips into some bad analysis and names the journalists who retailed it.

Screen Shot 2013-07-28 at 8.25.24 AMFORTUNE -- On Friday, Strategy Analytics issued a press release headlined "Samsung Becomes World's Most Profitable Handset Vendor in Q2 2013."

It was the kind of news that fits the dominant narrative in the business press -- that Apple (AAPL) is "doomed" -- and it quickly caught the notice of one of the chief promoters of that narrative, Business Insider. BI reporter Steve Kovach did some back-of-the-envelope calculations and ran with this headline:

Samsung Made $1.43 Billion More In Profit Than Apple Last Quarter

That headline was rewritten when someone pointed out that Kovach was comparing Apple's after tax net income to Samsung Electronics pre-tax operational income, but not before the story was picked up by the San Francisco ChronicleYahoo Finance and Cult of Android. A Google search of the original, incorrect headline conducted Saturday by AppleInsider's Daniel Eran Dilger returned 6,650 results.

The story only gets worse.

In a piece of press criticism that is a model for how these things should be done, Dilger went back to the original Strategy Analytics report and discovered it was based on a series of false assumptions and a mathematical shortcut in which a Strategy Analytics senior analyst estimated Apple's iPhone profits by simply dividing the company's total profits by two -- as if Apple earns the same profits on the iPhone as it does across the rest of its business (hint: it does not).

Google, Dilger reports, lists 833,000 search results for "Strategy Analytics profits Apple Samsung" -- more than three times the results it returns for the "Samsung pays Apple in nickels" hoax.

And then he names names:

"Strategy Analytics's "division by two" profit "estimates" press release was picked up and uncritically published by a variety of sources, including Juliette Garside of the Guardian UK, David Murphy of PC Mag, Tim Worstall of Forbes, Christopher Harress of London's International Business Times, Don Reisinger ofCNET, Ryan Knutson of the Wall Street Journal, Kevin C. Tofel of Gigaom, Zach Epstein of Boy Genius Report, Matt Clinch of CNBC, and a report by BBC News."

That's telling them.

AppleInsider link: Samsung has not dethroned Apple in mobile profits

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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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