A few years ago I predicted that Samsung will overwhelm Apple in the smartphone business in the same way they destroy Sony in Television market.
I was wrong.
The alarming decline in Samsung’s profit in the smartphone industry proves that Apple’s strategy of sticking to the high-end section of the industry is the right decision. Moreover, calls for the company to sell cheap iPhones show a deep misunderstanding of Apple is all about. You just have to look at their Mac business to see this is a company that knows what they are doing and won’t succumb to selling junk for the sake of market share.
Writing for AppleInsider, Daniel Eran Dilger pointed out that it’s not just Samsung, most smartphone vendors are struggling to turn a decent profit:
[su_quote] Essentially, every vendor apart from Apple in IDC’s top five has the same strategy of being “focused on shipments and market share” rather than profitability, giving them the same trajectory as Samsung. IDC is applauding this just as it applauded Samsung right up to its profit implosion.
Meanwhile, IDC has gravely warned for years that Apple’s market share continues to slip—in both smartphones and tablets—as it finds new ways to increase its Others category to insure the statistics keep telling this story of .
However, Apple’s profitability has continued to remain spectacularly high, even as shipment and market share leaders shifted from Motorola to Blackberry to Nokia to Samsung as their predecessors imploded in failure. Apple has made it explicitly clear that its goal is not market share, but profitability, something that’s only achieved by building great products that people want to buy. Gunning for market share is much easier: just ship tons of cheap products, and if necessary, give them away.[/su_quote]