For all of the talk framing the business of mobile phones being defined by the battle between Apple Inc. (NASDAQ: AAPL) and Google (NASDAQ: GOOG), a rivalry that covers both software proliferation and hardware sales, some investors may be missing the forest for the trees when it comes to fortunes in the mobile phone world.
More significant than the battle between these U.S. giants is the ascendance of Seoul-based Samsung. This technology manufacturer could very well unseat Nokia (NYSE: NOK) as the world’s number one mobile phone original equipment manufacturer (OEM), and unseat Apple as the face of high fashion consumer grade electronics.
The first good news for Samsung’s shareholders in the Korean stock market in the past week was the release of comScore’s monthly smartphone mobile report. The big headline was Google Android’s gains in subscriber numbers on both Apple and Research in Motion’s (NASDAQ: RIMM). A second takeaway was that Android’s growth is tied directly to Samsung’s growth in the U.S. and abroad. ComScore found that Samsung was the leading mobile phone manufacturer in the U.S. between July and October of 2010, taking a 24.2 percent market share, and edging out LG Electronics, Motorola (NYSE: MOT), Research in Motion, and Nokia. Apple’s iPhone 4 may have sold 14.1 million units and dominated news reports, but Samsung stole its sales thunder.
It wasn’t just in the mobile phone sector where Samsung made gains. The company released its Galaxy Tab tablet PC—running the same version of Google’s Android operating system that has made its Galaxy S smartphone so powerful—and the device is starting to catch up with Apple’s iPad tablet.
By November’s end, the 3G Galaxy Tab was available through nearly every major mobile carrier in the United States, including AT&T, Verizon, Sprint Nextel, and T-Mobile USA. Verizon and Sprint also began offering the iPad during the Galaxy Tab’s release window, but only WiFi models of Apple’s tablet, forcing consumers to carry a mobile hotspot with them for usage.
Perhaps that helped explain why sales of Samsung’s Galaxy tab doubled between the beginning of November and December 4th, bringing total sales to 1 million. Apple was able to hit that same sales milestone in just one month of release, but Samsung’s strong momentum at least disproves Apple CEO Steve Jobs’ statements from last October that the 7-inch tablet form factor would not appeal to consumers.
Samsung announced today its goal is to increase mobile phone shipments in 2011 by 18 percent to 330 million, an unnamed Samsung exec told Electronic Times Internet. To get there, Samsung needs a number of crucial factors to fall into place.
First, it needs to bring the price down on the existing model of Galaxy Tab and announce a second generation tablet using Google’s Android 2.3 (Gingerbread) operating system by the end of June 2011. That could help Samsung maintain its competitive edge with Apple as the Cupertino, Calif.-based investor’s darling unveils a second generation iPad during the first quarter of calendar 2011.
Second, Samsung needs to aggressively market its devices in the emerging Chinese smartphone market, to both cement its ambitions to unseat Nokia as the world’s leading mobile manufacturer and to halt Apple’s growing presence in the country.
Knocking off Apple will be a huge struggle but Samsung has already gained on the company. Investors take note: It’s not just Google in the fight against Apple.
As of this writing, Anthony Agnello did not own a position in any of the stocks named here.
