Galaxy S2 Propels Samsung, but can it Fend off iPhone 5

 
on July 30 2011 9:52 AM

Samsung Electronics saw explosive growth during the second quarter, primarily due to the roll-out of its venerable Galaxy S2 smartphone, but the expected iPhone 5 from rival Apple could put the breaks on the S2.

Smartphones generally saw impressive growth, rising a healthy 76 percent annually to reach 110 million units in the second quarter.

But it was Samsung who saw the most astounding growth, propelling it to become the No. 2 smartphone vendor in the world.

"Samsung overtook Nokia to become the world's second largest smartphone vendor in Q2 2011," Neil Mawston, director at Strategy Analytics said. "Samsung's shipments grew a huge 520 percent annually, for 17 percent global smartphone market share."

The research firm explained that Samsung's Galaxy portfolio has proven popular, especially the high-tier S2 Android model.

Samsung Galaxy S2 has not yet launched in the U.S., but analysts have started to assess the device thanks to its performance in international market, and it's already making a strong splash.

In July, the phone officially celebrated three million units sold globally, a number it achieved in just 55 days, while Korean press indicated the phone passed five million units by the end of the month.

It has also been the top seller for 17 consecutive weeks in United Kingdom where Samsung first launched Galaxy S2 and recently surged to rank No. 1 in Austria as well, in terms of smartphone market share.

"The Galaxy S2 has not only set a new bar for smartphones in 2011, it smashed that bar, recreated it in its own image, and put it out of reach of the competition," editors at the UK's Techradar said.

While Samsung has jetted past stalwarts like Nokia, there is another new player that it needs to be concerned about. Despite Samsung's stellar growth, Apple outsold both Samsung and Nokia.

Just four years after the release of the original iPhone, Apple has become the world's largest smartphone vendor by volume with 18 percent market share, pushing 20 million units in the quarter. It also out-profited rivals with its premium iPhone lineup.

At AT&T, the "old" iPhone 4 is still the most recommended device. In fact, iPhone sales beat non-iPhone sales and outstripped Android and other non-iOS devices by a margin of two-one.

But it's the next iPhone that is poised to elevate the bar against the whole current generation of smartphones, and anticipation is already building.

The device -- expected to sport a faster CPU and thinner profile, among other things -- is even slowing sales of current Apple products as anticipation builds, analysts contend.

Morgan Keegan's Tavis McCourt told investors on Friday that he believes Apple is set up for accelerated growth in the second half, explaining that many consumers may have sat on the sidelines in Q2 as the iPhone 5 is expected in September.

This should put Samsung on high-alert as Apple builds on top of its proven formula of a broad, but controlled ecosystem of products and services tied to the phone. Samsung could very well make up for this in manufacturing prowess, and the sheer momentum of its global growth.

"Although Apple's...growth placed it as number one this quarter, Samsung's 500 percent [year over year] growth shows that going forward, the top smartphone OEM position is Samsung's to lose," said ABI Research Senior Analyst Michael Morgan.

 

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