By Matt Burns
Sammy is now the big kahuna of cell phones. Tuesday's Juniper Research and comScore reports indicated that Samsung (OTC:SSNLF) kicked Apple (NASDAQ:AAPL) from the top spot in regards to smartphones. IDC also released a report indicating the same thing while noting that Samsung kicked Nokia (NYSE:NOK) from the top of total phone shipments. This comes just days after another analyst firm questioned Nokia's current title as reigning king. Samsung happened to be at the right place at the right time - but only because the company positioned itself properly.
Five years ago, Nokia was the world's dominant cell phone maker. It held a commanding slice of the pie. Profits were soaring on the wings of cheap devices. RIM (RIMM) was nearly as dominant in its smartphone arena. It was hip to have a crackberry addiction. Then things began to change. Now, five years later, both companies are in nearly equally precarious positions, priming the companies for utter failure or rise-from-the-ashes success.
While Nokia and RIM fell from grace, Samsung and Apple rose to the top. Apple had the benefit of being new to the space. Samsung had the tougher task of retooling its existing line to keep pace with new devices from Apple and HTC. But now, after just a few quarters of neck-to-neck racing, Samsung overtook Apple to become the largest smartphone vendor and overtook Nokia to be the largest vendor overall.
Samsung had a blockbuster first part of the year. It shipped a whopping 42 million smartphones, and per IDC's research is the only Android vendor on an upswing. The rest of the players are seeing a steady decline in shipments. Samsung's Galaxy line of smartphones are Android's only bright spot right now.
RIM is also on the decline. The once-king of smartphones dropped more market share during the first part of 2012 and only accounted for 6.8% of the smartphone shipments in the first quarter of 2012. However, while I still believe RIM can turn things around, the Canadian-based company is in a very tough spot after failing to innovate fast enough to compete with iOS and Android. BlackBerry 10 is a great start.
Nokia and RIM's decline was caused by sheer arrogance. The two companies rested on their respective successes. Failure to innovate and sell existing supporters on changes is a recipe for disaster. Instead of following the market toward high-end devices, both companies dove headfirst toward the low-end, leading the race downmarket.
Samsung went the other way. The Korean company followed Apple upmarket. In fact, they may have followed a bit too closely. Remember the never-ending patent battle over the striking similarities between Galaxy smartphones and Apple's iPhone?
The first line of Galaxy S smartphones were haphazard at best, but they set the stage for the fantastic Galaxy S II line. Now, as Samsung is the new king of mobile, the third generation is set to launch within the coming weeks. Samsung is succeeding because it kept moving.
The mobile phone wars are far from over. Apple and Samsung will continue to fight it out. The Samsung Galaxy S III will launch this month but the iPhone 5 (or whatever it's to be called) is coming soon as well. These reports also indicate that other smartphone vendors, being Android supporters or not, are seeing steady declines in shipments. It might soon be a two dog race.