It’s not only smartphones that get thinner, also the profits in Android phones. Samsung recently revealed drops in smartphone sales in their 3rd Quarter report. Compared to 3Q2013 the Samsung sales where down 8% whereas the market in total grew by 25%. Samsungs market share dropped from 32% to 24%, still being the “Gorilla” of the smartphone market. One key reason that is mentioned by analysts is the drawbacks of using the world-wide standard platform Android. It becomes harder and harder to differentiate your device from the other vendors – what is left is hardware performance (expensive!) and price (=profit drop). The competitors with the fastest rising market share on the Android scene are not surprisingly Chinese, Xiaomi and Lenovo that both now are sporting a market share of 5% each. Here Apple, with is propriety iOS platform, sails smoothly keeping their 12% market share. The parallel to the earlier developments in personal computers is clear. Fierce competition in Windows based PCs created a large volume market with low margins for products based on open standards, whereas Apple managed to keep up profits based on their crowd of devoted followers.
Another reason for Samsung’s reduced profits, is thecostly IPR settlements with Ericsson, Apple and others, that Samsung had to put up with. Meanwhile, on a positive note, Samsung’s chip division posted record earnings.