Jungah Lee and Lulu Yilun Chen Seoul and Hong Kong
Samsung Electronics’ strategy of selling smartphones at every price point spurred record earnings at Asia’s biggest technology company and helped push Taiwanese competitor HTC to its first ever quarterly loss.
Samsung’s third-quarter operating profit rose to about 10.1 trillion won (R94 billion), beating analyst estimates, on sales of cheaper handsets in emerging markets. HTC posted a net loss of NT$2.97bn (R1bn) in the period as its global smartphone market share plunged by more than half.
While HTC has focused a revival on its flagship One handset and $12 million (R120m) marketing deal with actor Robert Downey Jr, Samsung has expanded its range of mid-priced smartphones such as the Galaxy Golden and S4 Mini to capture sales in China and India. It has also benefited from rising prices for the memory chips it makes for customers including Apple.
“Companies can’t survive with a single device for more than six months or a year,” said Lee Seung Woo, a Seoul-based analyst at IBK Securities. “Samsung’s identity is all about speed, which no one can easily mimic. The market is changing extremely fast.”
The results from both companies were preliminary with no division details released.
Samsung, the biggest smartphone maker, is tapping demand for low-cost Galaxy devices in developing regions, including the Middle East.
The biggest chip maker, which supplies the iPhone 5s, is benefiting from higher prices after a fire at competitor SK Hynix’s plant in China hampered production.
“Samsung was able to extend its mid-priced smartphone offerings such as S3 and other Galaxy models, mainly in emerging markets,” said Park Kang Ho at Daishin Securities in Seoul. “The fourth quarter looks even better.”
Sales at Samsung were about 59 trillion won in the third quarter, the company said on Friday, in line with estimates. HTC posted revenue of NT$47bn in the quarter, an eighth consecutive decline.
Samsung sells at least 40 smartphone models, according to its US website, helping it weather stalling demand for high-end devices. That compares with about 25 devices listed by HTC.
The release of the HTC One was delayed amid a shortage of camera components, which pushed it into the same timeframe as Samsung’s flagship Galaxy S4. “HTC needs to figure out if it just wants to focus on the high-end market or the mid- to low-end segment, and right now it is missing out on both,” said Wang Wanli, an analyst at CIMB Securities in Taipei.
HTC was considering a proposal by Microsoft to add its Windows operating system to smartphones using Google’s Android software at little or no cost, people with knowledge of the matter said. – Bloomberg