Samsung Electronics posted record quarterly profit of $5.15 billion, driven by booming sales of its smart phones and the Galaxy Note 'phablet', which it hopes will show it has a flair for innovation to match rival Apple Inc.
The Note - part phone, part mini-tablet - with a throwback stylus and screen half the size of the iPad, has sold more than 5 million since launching in October, and is proving a surprise money earner for the South Korean electronics giant that has a reputation as a 'fast follower' rather than design leader. "Higher-than-expected shipments of the Galaxy Note seem to have given an upside to earnings," said Lee Ka-keun, an analyst at Hana Daetoo Securities. "Note sales will increase further in the second quarter, and handset profit will grow despite a rise in marketing costs related to the London Olympics."
Samsung, which raced to the top of the global smartphone rankings last year with close to a fifth of the market, from just 3 percent in 2009, is set to go head-to-head with Apple this quarter with the expected launch of a revamped Galaxy S, its flagship smartphone, and Apple's next iPhone. "They will engage in a full-fledged war," said Hana Daetoo's Lee. The Note sits somewhere between a small tablet and a big smartphone, and its early success illustrates that a maturing mobile device market can open up new opportunities as users and manufacturers experiment with form. Samsung has driven the Note with its marketing and distribution clout.
"We're seeing a shift in the marketplace and there's room for diversity," says Shivesh Vishwanathan, senior solutions architect at Persistent Systems. Put together by Samsung's design chief Lee Minhyouk as a smartphone 'taboo breaker', the Note increases the pressure on gadget strugglers HTC, Nokia and BlackBerry maker Research in Motion. HTC, the world's No.5 smartphone maker, said on Friday its January-March net profit slumped 70 percent to around $151 million, battered by competition from Apple and Samsung, though it hopes the launch of its One series will help win back some of that lost market share.
Samsung's January-March operating profit was 5.8 trillion won, almost double the year-ago level and above a consensus forecast of 5 trillion won from analysts surveyed by Thomson Reuters I/B/E/S. It also topped the preceding quarter's previous record of 5.3 trillion won. Revenue was 45 trillion won. Asia's most valuable technology firm worth some $191 billion released its January-March estimates on Friday ahead of detailed quarterly results due on April 27.