≡ Menu

LG pushes Apple into 3rd place in US market / Samsung finally recognized for innovation

So, I take it that iPhone 5 isn’t doing so hot:

LG Electronics has pushed Apple into third place in the North American mobile phone market.

LG rose to second place with a 13 percent share in December, overtaking Apple, which had 12 percent, according to Hong Kong market researcher Counterpoint Research.

LG was in second place in North America until the third quarter of 2011, when it ceded the position to Apple after the release of the iPhone 4S.

And to piss a bit more in Apple’s Wheaties, the Boston Consulting Group has named Samsung the world’s third most innovative company behind Apple and Google. And that’s not good for Apple—said Haydn Shaughnessy at Forbes:

Samsung is an innovator and has risen up the BCG rankings by 8 places. Behind the scenes Samsung invests heavily in its engineers’ innovation capabilities. While we’ve all been watching the court case, Samsung has gone from strength to strength. And is now neck and neck with Apple on revenues. 2013 could be the year we look to Korea for who is defining the future of tech.

I stand by what I said earlier—Seoul is the place where the future will happen.

One of the links in that piece is to a Salon story on how Samsung became the world’s biggest tech company—the part about the Note is instructive:

Consider the phablet. Back in 2011, when Samsung first unveiled the Galaxy Note—a 5.3-inch smartphone that was big enough to be a minitablet, hence the ugly portmanteau—the world’s tech pundits couldn’t stifle their giggles. Was it a phone? Was it a tablet? Was it a joke? Smartphone industry blog Boy Genius Report called the Note “the most useless phone I’ve ever used,” adding: “You will look stupid talking on it, people will laugh at you, and you’ll be unhappy if you buy it.” Gizmodo argued that the Note “isn’t just designed poorly—it’s hardly even designed for humans.” I couldn’t resist joining the chorus. With the Note, I wrote, Samsung was hoping to stoke a certain kind of envy in young men all over the world. The firm was banking on the fact that “when you whip a phone as big as the Galaxy Note out of your pants, some dudes will think you’re a god.”

But the joke’s on me and my smart-ass tech journo colleagues. Confounding our predictions, Samsung sold 10 million Notes in 2012, making it one of the most successful smartphone launches in history. Then, in the fall, Samsung launched the Galaxy Note II, an upgraded version with an even larger screen—and it promptly sold 5 million of them, and is on track to sell 20 million over the course of the year. The Note’s success has spawned a spate of copycats, with phablets becoming the hottest new smartphone category. Over at Quartz, Christopher Mims smartly argues that as ridiculous as it looks, the phablet is becoming the computing device of choice in the developing world. “If your budget is limited, why deal with two different upgrade cycles and two different devices, when you can put all of your money into a single device?” he argues. Mims believes that the Note’s success may even force Apple to build a rival phablet.

Since I switched to the Galaxy Note, I can’t even look at an iPhone without giggling. It’s just so puny, like a shriveled appendage or something.

About the author: Just the administrator of this humble blog.

  • SomeguyinKorea

    Consider how unstable the software on my LG smartphone is and how slow the company has been to release upgrades…Damn, Apple is taking a dive.

    And the Galaxy Note…I can understand the attraction, but I use a lot the GPS functions on my phone when I go hiking.  I can’t imagine lugging around a Galaxy Note in the mountains.

  • http://atlantarofters.blogspot.com The Sanity Inspector

    A phablet might be one of those counter-intuitive strokes of marketing genius that comes along every so often.  Whoever perceived that people in the 80s would buy a minivan was very smart.  But whoever perceived that the same people would later buy an extra-large minivan was a genius.  

  • http://www.rjkoehler.com Robert Koehler

    Really? I just brought a Galaxy Note up Mt. Taebaeksan in winter and it did just fine:

    http://instagram.com/p/UUwXVFoeeT/

  • Chris Smallwood

    The reason the Note took off is that it’s a better media consumption device then the phone yet also possesses cellular communication capabilities.  It being overly large isn’t a detractor as people spend most of their time writing texts to each other, and if the size is an issue you can easily get a blue tooth headset.

  • Evan Ramstad

    There’s definitely a meme happening of Samsung/LG getting back at Apple or overcoming the big threat of the iPhone/iPad etc. and it has spread from the always-cheerleading domestic press to outlets like Forbes, whose writers ought to be able to put things in better perspective than this particular article does.

    Leaving aside the argument of whether or not the iPhone is successful or living up to expectations (the world awaits Apple’s Oct-Dec quarter results announcement on Tuesday), Apple’s reputation has, particularly since the release of the first iPhone, been bigger than its market share.

    Indeed, Samsung has always sold more phones in the U.S. and worldwide than Apple and, up until late 2011, so did LG. Now LG has taken back some market share. Apple beat both companies in smartphones of course. But with all phones becoming smartphones, Samsung last year started selling more smartphones than Apple. This year will be the first year that a majority of cellphone sales are smartphones, but Samsung beat the incumbent (pre-Apple) cellphone sellers by crossing that threshold in 2012. By 2015, probably 80-90% of cellphones will be smartphones and this whole “race” will be silly.

    In the South Korean media and among some financial analysts (who should also know better), a different form of this meme has taken hold, which is the suggestion or impression that Samsung is finally bigger than Apple or is beating Apple in revenue.

    Actually, Samsung has always been bigger than Apple. Just a short time ago, it was far bigger, but now Apple has nearly caught up to Samsung’s size. Here’s the last decade or so of sales from the two companies annual reports. In Samsung’s case, the dollar figure is for the KRW/USD exchange rate of that year:

     

              
    Apple         Samsung

    2001  $5.4b  
           W46t  $35b

    2002  $5.7b  
           W60t  $49b

    2003  $6.2b  
           W64t  $54b

    2004  $8.3b  
           W82t  $78b

    2005  $13b   
           W81t  $79b

    2006  $19b   
           W85t  $91b

    2007  $24b   
           W99t  $105b

    2008  $32b   
           W121t $104b

    2009  $43b    
          W139t $119b

    2010  $65b    
          W155t  $134b

    2011  $108b        
     W165t  $143b

    2012  $156b        
    W200t+ around $180-185b

     

  • silver surfer

    Looks like Samsung’s strategy of taking the iPhone and coming up with a product just like it has paid off handsomely for them.

  • SomeguyinKorea

    I don’t really go hiking.  I conduct field research of the trails, actually. I carry a lot of gear and I need something I can pull out of my pocket quickly to consult my waypoints. Anything bigger than my smartphone would be too big.

  • SomeguyinKorea

     off the trails, that is.

  • http://www.rjkoehler.com Robert Koehler

    OK, now I’m intrigued. May I ask what it is you do for a living?

  • Creo69

    Whatever it is he doesn’t do much of it because he is on this blog almost every minute of every day from what I can tell.

  • Cm

    I have the Note 2, and my daughter has the new LG Optimus G, while my wife has the Apple 4S.  I can certainly see why they’re doing very well. Having used the Note 2 for few months now, I don’t find it that big.  Now it seems like all the other phones I see, just seems unnaturally too small to me. The phablet can slide easily into my suit’s chest pocket like a wallet, because it is a wallet size.  It can also slide easily into my jean’s hip pocket.  I don’t see what the issue is with the size thing. I think it’s just people being sheeps following the shepherd.  I love the swipe keyboard, now I can type twice as fast than normal.  And the battery, after tinkering around, is surprisingly good for such a large screen phone.  The only complaint I have with the Note is that it’s an LTE phone, but too many times I don’t get the LTE coverage when I’m supposed to. It just  drops to 4G, don’t know why.  I know it’s not the carrier because my daughter’s LG which is the same carrier, gets the LTE in the same location that the Note doesn’t get.  The brightness and color on the LG Optimus is vivid and it is blazingly fast because of its quad core.

  • SomeguyinKorea

    Yeah, I have my own cyber-stalker.

  • SomeguyinKorea

    I wish I could tell you, but I know for a fact that we have friends in common, some of which I’m sure read this blog (and that’s already saying a lot, maybe too much).

  • ex_commander

    If you were in the market again, of the three you mentioned, which phone would you buy?

  • RElgin

    You are so right.  A gun is heavy enough unless you glue the phone onto
    it.  Then the whole ensemble becomes a great marketing tool.

  • Cm

     Having used all three, definitely the Note 2, due to its screen size.  I can actually see the screen, and use the internet without reading glasses.  Now I don’t get the eye pain and severe head ache that I used to get looking at the small screens. The Note 2 is made for people like me.  Apple is losing out greatly because they’re too stubborn to expand their product line ups and give consumers with different needs, what they want.  One size for all approach doesn’t always work out all the time.

  • Jang

    In a recent article in the WSJ you wrote about a smartphone editor at Anandtech.com who took a picture of a Samsung smartphone at the CES in Las Vegas but Samsung didn’t like it and told him to remove it from the website.  Sounds like typical Samsung style, but aren’t photographs allowed at the CES and did he remove it?

  • RElgin

    I am sticking with my 2nd generation Samsung dog-phone and using an iPad for more advanced applications – without 4G.  It is cheaper that way.

    I am concerned about the direction that Apple is taking now and, if Apple becomes more restrictive in their business practices, they will suffer, IMHO.  As it is, I am very unhappy with their restrictions upon which credit card I can use with whichever store that I want to deal with.  It is very counter-productive.

  • SomeguyinKorea

    I’m no longer a soldier and I got rid of my rifle last time I was back home.

  • RElgin

     I’m only joshing you  ^_^

  • Kaizenmx

    Android is great because how customization-friendly it is. IOS is user friendly, but that’s about it.

    And seeing I have both used IOS and Android in the past, I can definitely see why people are switching to Android more and more.

  • wangkon936

    But cm, the iPhone is of the perfect size to fit into your hand, isn’t it?  Who cares if we all don’t have the eagle eyes of Steve Jobs to read that tiny 3.5 inch screen!

  • wangkon936

    Evan,

    What do you mean by bigger?  If you mean in terms of sales and product breath, then Sammy will always be bigger simply because it is more like a company that’s a combination of Sony, HP, Motorola, Intel and Whirlpool.  It’s really like comparing apples to oranges, no put intended.  Apple make personal computer and mobility devices.  It likes to dabble in software with increasingly mixed results (iOS good, Apple Maps bad).  Samsung’s sales will be bigger for the foreseeable future simply because it makes more “stuff.”

    Now in terms of profitability and market capitalization (i.e. valuation), Apple will be “bigger” at least for the near term future given it’s way higher profit margin and current market estimation of value.  Who knows how long that will last, especially if Apple’s Tim Cook can’t pull any new product innovation out of his hat other than longer iPhones (iPhone 5) and smaller iPads (iPad mini).  I was always skeptical if a supply chain guy could drive product innovation as well Steve Jobs. 

  • Inseoul

    htc one x sure beats the pants off the nexus-it’s the first phone i’ve had no complaints about. 

  • wangkon936

    I do not own any Apple shares, but I know a lot of people who do.  I am concerned about these people because they bought those shares when it was in the $600′s and I don’t know when, or if, they will make their money back.

    IMHO, Apple is now playing the game to lose.  What I hear from their apologists is similar to what Sony and Panasonic apologists were saying in the early and mid-2000′s.  Samsung just makes cheaper versions of our products, they copy our products and steal our engineers, blah blah blah blah.http://www.patentlyapple.com/patently-apple/2013/01/koreans-dream-could-samsung-be-cooler-than-apple.html

    The arrogance dripping from this article is amazing.  Give the naked metrics of the industry such as market share, profit margins, unit sales, etc. Apple fans (and bloggers) shouldn’t be discounting Samsung in this manner.  Apple completely missed the boat on the “phablet” form factor and the smaller (~ 7 inch) tablet.  None of their apologists acknowledge this, but they should.  Some level of self reflection from their user community should be taking place.  They have very few recent victories to boast about.

    I wouldn’t be surprised if there is similar complacency at Apple corporate.  Stock price going from $702 to $485 in less than 8 months is bad.  Real bad.  If I was Apple, I would be in crisis mode.  I would get Apple TV out as fast as humanly possible.  I would get the iPhone 6 out as fast as humanly possible.

  • RElgin

    Android is way too easy to hack and there are already rootkits out here for it.  I will still go the safest route.

  • dlbarch

    Yeah, I hear BMW is in real trouble because sales of Honda Civics and Toyota Camrys were up last year.

    Gawd, almighty…is Evan really the only person on this thread who actually knows anything about basic market share analysis?

    As long as they actually, you know, don’t infringe any patents or break any antitrust laws, I say let Samsux and LG grab all the market share for Android knock-offs they want. These companies do, in fact, make very good low-cost products.

    But they also cater to a distinct, middle to low-brow market segment, and at this point are really just fighting over a share of the discount Android commodity market.

    And don’t forget, Lee Keun-hee himself is just one strike away from being sentenced to life as a habitual criminal, so let’s not forget that these companies have their good governance work cut out for them before they are truly welcome among the ranks of respectable corporate citizens.

    That should count for something, at least in the U.S. if not Korea.

    DLB

  • Django

    I know, you want Apple to rush to get the iPhone 6 and Apple TV out “as fast as humanly possible” so Samsux will have more to copy!

  • dlbarch

    The joke here in Silicon Valley is that every new engineer hired by Samsux gets a free annual subscription to Wired and MacWorld magazines, and has the homepage on their computer at work set to MacRumors.com.

    DLB

  • wangkon936

    Again, exactly what Sony said 5-7 years ago.

  • wangkon936

    I am making the request so Apple’s sales can increase growth, thus their share price with resume its rise.  Someone has to be concerned about Apple’s share holders.  Obviously, Apple itself is not.

  • Hans

     And probably what Samsung will be saying in 5-7 years (or earlier) about Huawei and ZTE.

  • wangkon936

    Huawei may have a chance in 10 years.  ZTE has been stinking it up lately.

    http://online.wsj.com/article/SB10001424127887324624404578255141560838214.html

  • dlbarch

    I’ve typically found that when Koreans have nothing to say, they start talking about Sony.

    What’s extraordinary about the Korean obsession with Sony is that it’s almost always (1) a throwaway line and (2) used as some kind of imagined warning against every other international company except Korean companies. It really is quite fascinating.

    Unfortunately, insinuating that Apple is somehow like Sony…without actually explaining how, you know, Apple is anything like Sony…is a mugs game.

    First, Apple isn’t actually anything like Sony.

    Second, it shows a spectacular lack of understanding of why and how Sony has all but failed in the global smartphone market.

    More to the point, Samsung’s prospects are still overwhelmingly dependent on cost competitiveness, not value-added innovation. Samsux’s business strategy has been to combine Apple’s design and conceptual platforms with Google’s Android OS system and offer a cut-rate product with thin margins in the hope of taking high-volume market share. So far, that strategy has worked beautifully, particularly because Samsux has truly impressive marketing relationships with its global telecom vendors.

    But there is practically nothing value-added in Samsux’s family of smartphone offerings. It’s all high-volume, low-margin stuff built around a hodgepodge of platforms designed by others. Customers buy Samsux because it’s cheap, not out of any brand loyalty to the platform. That is a very precarious business model, and not a promising one in an ever-changing telecom sector.

    Finally, the notion that Samsux is anything equivalent to Apple is nonsense. Apple’s app
    ecosystem alone makes it a radically better
    product.

    Of course, Samsux has done very well by adding an inch or so to its phablets, so maybe that counts as innovation from a company with a history of making larger and larger televisions.

    DLB

  • Cm

    I’ve been using the Phablet, and I can assure you, it’s far better than the iPhone that I used to use. And it’s absolutely nothing like the iPhone, nor is it just a cheap copy.  I do not consider a phone that costs $600 without a contract, a cheap phone.

    The BGG, Forbes, the CES, and just about all others disagree with your analysis. There are real hardware innovations going on at Samsung who are close to redefining the smart phone industry with a new form factor. But what’s Apple doing other than planning new lawsuits?

  • R. elgin

    Good hardware is nice but what to put into a device . . . you and everyone else should be reminded of exactly how bad most hardware makers are at writing software, for example most cars, TVs, home appliances, etc. and there is still the security problem of using an operating system that is easily hackable.

    As of now, Samsung does not have content that makes me want to buy their products.

  • Jang

     Next for Samsux will be “fingerprint detection,” after Apple releases the iPhone 6 which will have it first.

  • SalarymaninSeoul

    Steve Jobs is dead..good riddance

  • PortaJohn

    I will probably buy Apple products for the next 5 years at least, unless their designs go way downhill. I’ll never buy a samsung product, because I’ve had reliability problems with them. Plus, when I was consulting in Seoul, Samsung cheated my company.

  • Cm

     No need tor that since Samsung already has the face recognition detection, and it works very well.  I guess Apple had to come up with something to counter that one.

  • wangkon936

    Steve Jobs drove that company.  I don’t know how Apple is going to be the same company without him.  Ives is a design nerd and Cook is a supply chain nerd.  Neither have the same CEO chops and Jobs and the stock price is reflecting it.