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As Apple's iPhone sales dim, Samsung Galaxy's brightens

By Associated Press


associated press / 2011Sales of iPhones has slowed, while Samsung's Galaxy S III has joined the smartphone competition. Samsung Electronics' Galaxy S, left, and Apple's iPhone4 are displayed at a phone shop in Seoul.

NEW YORK » The once-sexy iPhone is starting to look small and chubby.

That's become a problem for Apple, which revealed last week that iPhone sales have slowed. Part of the problem is that the competition has thinner phones with bigger screens, a formula that works.

For a dose of smartphone envy, iPhone owners need to look no further than Samsung Electronics Co., the No. 1 maker of smartphones in the world. Its newest flagship phone, the Galaxy S III, is sleek and wafer-thin.

It can run on the fastest networks and act as a "smart wallet," too — two things the Apple's iconic phone can't do.

The iPhone "is getting a bit long in the tooth," says Ramon Llamas, an analyst with research firm IDC.

Apple has become the world's most valuable company on the back of the iPhone, which makes up nearly half of its revenue. The iPhone certainly has room to grow. Only 1 in 6 smartphones sold globally in the second quarter had an Apple logo on its back.

When Apple reported financial results for its latest quarter last week, a new phenomenon was revealed. Buyers started pulling back on iPhone purchases just six months after the launch of the latest iPhone model.

Apple executives blamed the tepid sales on "rumors and speculation" that may have caused some consumers to wait for the next iPhone, which is due in the fall. But in the past, iPhone sales have stayed strong nine months after the new model is launched, then dipped as people began holding off, waiting for the new model.

In the April-to-June period, Apple sold 26 million phones, 28 percent more than it did in the same quarter last year.

Most other phone makers "would kill" for those numbers, says Stephen Baker, an analyst with research firm NPD Group. But since the iPhone's introduction in 2007, the average annual growth rate has been 112 percent.

The competitor that doesn't need to kill for those numbers is Samsung, which has solidified its position at the world's largest maker of smartphones. Analysts believe it sold just over 50 million smartphones in the second quarter, or nearly twice as many as Apple. (The company doesn't release specific figures.) Its smartphone sales have nearly tripled in a year, from 18.4 million, according to IDC.

Most of Samsung's sales comprise cheaper smartphones that don't compete directly with the iPhone. Its flagship phones, though, have emerged as the iPhone's chief rivals.

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serious wrote:
I wouldn't short AAPL.
on July 31,2012 | 05:08AM
Kapakahi wrote:
Apple stock dipped when this pessimistic interpretation started circulating. But smart investors saw through the nonsense and hitched a ride as the stock jumped back up. Competition between Samsung and Apple is good. It helps drive innovation. But what is the profit margin per unit? Apple makes MUCH more per iPhone than Samsung does with its Galaxy.

When the iPhone 5 is released in October, sales will surge from the pent up demand. Superficial analyses like this one provide an opportunity for investors to pick up Apple stock at a slight discount before the underlying fundamentals push the stock price up again.

on July 31,2012 | 09:30AM
Macadamiamac wrote:
iPhone 4 & 4s sales are sagging because anticipation for the 5 model is up thanks to media shills and speculators like the writer of this article. No question Android OS devices are starting to catch up, but Apple is still the leader in design, functionality and sales volume – despite its price premium.
on July 31,2012 | 07:07AM
OldDiver wrote:
And let's remember while Apple reports phone sold Samsung and the rest report phones shipped. Big difference.
on July 31,2012 | 08:41AM
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