Monopoly: Samsung bagged 95% of all Android profits in Q1

May 17, 2013
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In a world crowded by so many mobile device manufacturers, you’d think that the profit pie would be shared somewhat proportionally between participants. That’s not the case however. A recent reports shows  that, in the first quarter of 2013, Samsung managed to bag around 95 percent of all profits made on Android.

The figure may be unbelievable to some, but taking in consideration that, during the same period of the last year, Samsung accounted for 90 percent of all smartphone profits, this is merely an incremental increase.

But how does a company as Samsung manage to crush its competition so badly?

There is no competitor

The Seoul-based company sells many expensive, high-margin products, such as the Galaxy S4, the Galaxy Note 2, or the Galaxy Camera, but it seems that people opt for quality and tend to remain loyal to a prestigious brand. In addition to the top liners, Samsung carpet-bombs the market with a device for every taste and budget.

Some other contributing factors are Samsung’s impressive manufacturing capability, which allows it to keep building costs to a minimum, the massive and well executed marketing campaigns, and the excellent relationships that the Koreans have with carriers from all over the world.

But an equally important contributor to Samsung’s monopolization of the Android profits is the strategy adopted by the competition. While HTC tried to basically follow the same path by releasing attractive and pricy smartphones like the One, some other manufacturers prefer to go at a loss, in an attempt to build market presence and mind share.

For instance, LG partnering with Google to sell a fantastic phone at an amazing price has not done wonders for the balance sheet, but it succeeded in gave some much needed sheen to LG’s name. Still, with a phone that good, and with some other impressive devices created in-house, LG took home a mere 3% of the global Android profit share in the first quarter of the year.

In pure numbers, the total operating profit of the smartphone industry for Q1 2013 was estimated to reach $5.3 billion, from which Samsung claimed $5.1 billion. LG’s strategy has gained the company a little over $100 million, while the remaining was split between several other manufacturers.

Samsung’s power over Android has been demonstrated time and again, but the future may bring it even more clout and financial domination. Even Google chose to exclusively sell an unlocked version of the Galaxy S4 online after partnering twice with Samsung for older Nexus generations, which is a trust no other company has ever gained. And maybe this trust will bring more perks for Samsung, like early access to Android updates, which should give the company another advantage against its competitors.

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