Apple’s business model has been to grab the high end of the market by charging high prices for a similar phone to what Samsung sold. In this market, where consumer intelligence is not a prime motivator, Jobs’ Mob did very well.
Samsung also had its mid-range phones being eaten alive by low cost Chinese rivals.
In April, It introduced the high-end and well-reviewed Galaxy S6 and S6 Edge, flagship handsets made of premium materials, something consumers have requested for years.
Now it reported an 82 percent rise in operating profit, snapping a streak of seven consecutive quarterly profit declines, even though revenue from its mobile division was largely flat.
Samsung reported third-quarter operating profit $6.45 billion, on revenue of $51.68 billion. The company said it saw a “significant increase” in smartphone shipments but that revenue was hurt by price cuts for its Galaxy S6 and S6 Edge and shipments of low- to midrange smartphones.
The mobile division’s profit increased by about 33 percent, providing about a third of total operating profit in the quarter but sharply lower than the two-thirds it’s provided in the past. Meanwhile, profits doubled at the division housing Samsung’s chip and display businesses.
Annoyingly for Samsung it does not think that things will stay good for long. It forecast profits would fall in the fourth quarter.
This is because its next flagship smartphone, the Galaxy S7 will not be around until January. This is earlier than normal, but is designed to undercut sales of the iPhone 6S. Samsung rightly senses that the iPhone 6S is vulnerable to a product which is cheaper and has more to offer.