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As Samsung Electronics and Apple continue to slug it out across the globe for domination of the smartphone market, the South Korean maker continues to edge out the California company.
Samsung is now more profitable than Apple, according to second-quarter financial results released by Samsung on Friday in Seoul. But while the two rivals have successively one-upped each other with ever sleeker, more technologically sophisticated phones, new competition is stirring.
Already, the combined share of the worldwide smartphone market controlled by Apple and Samsung slipped to 43 per cent in the second quarter from 49 per cent a year earlier, IDC, a research firm, reported Friday.
Some of the companies that are chipping away at the leaders are familiar names attempting comebacks, like Sony, Nokia and HTC. Others are relative newcomers, like LG of South Korea and Lenovo, ZTE and Huawei of China.
"The story is no longer Apple versus Samsung," said Bryan Wang, an analyst at Forrester Research. "Going forward, they will both face similar challenges."
Analysts say buyers are more willing to look at alternatives to Apple or Samsung because the differences among smartphones are becoming less pronounced.
The proportion of phones running Google's Android operating system keeps growing and technical specifications are converging. Like Samsung's Galaxy S4, a number of other phones, including Sony's Xperia Z, also include high-definition, 5-inch screens.
That makes price, where the Chinese smartphone makers have an edge, an increasingly important selling point.
Those challenges were evident in the latest earnings report from Samsung on Friday, when the company said it expected competition in the smartphone business to stiffen in the third quarter, with new models pending from LG and other rivals. "The strong growth streak for the smartphone market is expected to continue in the third quarter, albeit at a slower pace," the company said in a statement.
Samsung remains a powerhouse, reporting big gains Friday in sales and earnings for its latest quarter. Net income rose 50 per cent, to 7.77 trillion won, or $6.96 billion, from 5.19 trillion won a year earlier. Revenue rose to 57.46 trillion won, or $51.6 billion. from 47.6 trillion won.
On Tuesday, Apple posted quarterly net income of $6.9 billion on revenue of $35.3 billion.
Samsung had previously pulled ahead of Apple in market share, and its gains continued in the second quarter, when it controlled 30.4 per cent of global smartphone shipments, compared with 13.1 per cent for Apple, according to IDC.
Samsung has had to work harder than Apple to achieve those gains. Ubiquitous TV ads around the world and big-ticket promotional events like an introductory gala for its flagship model, the Galaxy S4, at Radio City Music Hall have driven up marketing costs. And while the S4 has been selling at a brisk pace, it has fallen short of some analysts' expectations. Investors have grown accustomed to bigger gains, and the share price of Samsung, like Apple shares, has taken a beating this year.
"In a way, Apple and Samsung have become victims of their own success," said Pete Cunningham, an analyst at the research firm Canalys. "When these companies report many billions of profits every quarter, it's hard to say they are doing anything wrong."
While the old generation of phone makers - Nokia, Motorola, BlackBerry - struggle, together Samsung and Apple still collect more than 90 per cent of the profit in smartphones, analysts say. Yet that success has emboldened more companies to try to challenge them.
