Samsung Overtakes Apple in the Smartphone Market

Samsung Electronics Co. has surged past Apple Inc. (NASDAQ:AAPL) in the smartphone market, as the top smartphone manufacturer globally in the third quarter with a 44% jump in sales.

Samsung having only made an entry into the smartphone market last year has succeeded in competing against industry stalwarts such as Research In Motion, Nokia and others. Thanks largely to the slim production system and to the designs that allegedly replicate Apple’s iPhone designs. Apple launched its iPhone in 2007 and is a major customer of Samsung, depending on a large quantity of its phone and tablet components.

Samsung is anticipating strong smartphone sales in the fourth quarter creating clear threats to its smartphone rivals. Samsung is also set to launch new smartphones in the coming months. Currently Samsung has no real rival models to compete against, except for Apple’s iPhone 4S. It is predicted that Samsung will dominate the smartphone market in the fourth quarter as well.

The South Korean based smartphone maker announced its profits on Friday, stating that profits doubled compared to last year to a whopping $2.2 billion and resulted for 60% of Samsung’s entire profit. According to strategy analysts smartphone sales increased 44 percent from the recent quarter to 27.8 million handsets up close to four times form last year.

iPhone sales dropped by 16 percent, in the third fiscal quarter, to 1.1 million handsets. 23.8 percent of the smartphone market worldwide was owned by Samsung in the third quarter, 9 notches above Apple Inc. Samsung’s Galaxy series which is a major driver for smartphone sales runs on Google’s software called Android.

Apple’s iPhone sales dropped in the third quarter missing Wall Street expectations for the first time in 2011, as customers stopped buying iPhone. Customers were delaying their plans to upgrade this phones in anticipation of the launch of an iPhone 5. However with the launch of iPhone 4S instead of an iPhone 5, there was not as much excitement as hoped for.

The largest technology firm globally by revenue posted a 4.25 trillion won profit in the third quarter, widely in line with its past estimate of 4.2 trillion won. Samsung’s shares increased by 16 percent by around 1 a.m EDT, against a 0.6% gain in the wider market.

Increased fourth quarter sales compared to the recent quarter are being expected by Samsung, boosted by its sale of hard disk business worth $1.4 billion to Seagate Technology. Robert Yi, head for investor relations at Samsung said that he is very optimistic on the fourth fiscal quarter’s outlook at this point.

Nevertheless, Samsung is facing greater challenges as Nokia is aiming a comeback to the smartphone market with the launch of its first Microsoft windows based smart phones. Sony Corp on Thursday announced it will acquire Ericsson’s share in the joint mobile venture, in attempts to catch up with its smartphone rivals. Motorola Mobility, the smartphone manufacturer that has been acquired by Google is also launching the Moto RAZR Droid, which will give touch competition to Samsung.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.