Samsung's released profit figures for Q4 2011 beat market expectations, thanks, in part, to strong smartphone sales. Analysts anticipate that Samsung will have sold around 35 million smartphones in Q4 2011, making it comfortably the largest manufacturer of smartphones by device volume. The majority of these sales come from Android devices, but will also include sales from its Bada and Windows Phone portfolio.
The short term prospects look good for Samsung, but longer term questions remain about how sucessfully Samsung can deliver on its intention to transfer sales from its Android portfolio to its Bada portfolio.
Windows Phone devices likely make up only a small proportion of Samsung's smartphone sales. However, Samsung is likely to remain an active player in the Windows Phone ecosystem, at least while there is demand from operators, but the recent entry of Nokia into the Windows Phone ecosystem means the strategic balance of the platform has shifted, which will change the competitive dynamics.
HTC's net profits fell by 25.5% in Q4, a little below market expectations, despite earlier warnings of poor performance from HTC. Its the first decrease in profits for the company in two years as it faces increasing fierce competition, most notably from Samsung and Apple, which decreased demand for its devices in the US market. Analysts suggest that HTC sold 10 million smartphones in Q4 2011, down from 13.2 million in Q3 2011, and predict shipment numbers may fall further during Q1 2012.
It's hard to point to one factor that has led to HTC's decling smartphone sales. Increasingly fierce competition in the Android space is certainly a factor; facing off against Samsung, which has an built-in supply chain advantage over HTC, is difficult, especially in the mid tier, where devices are more commoditised.
Windows Phone devices make up a greater proportion of HTC devices sales (in September 2011 reported indicated that devices running on Microsoft's mobile platform accounted for 30% of HTC's sales revenue). The impact of the launch of Mango and the related second generation devices, which would have been expected to boost sales, may have been offset by the entrance of Nokia into the Windows Phone ecosystem.
More generally HTC's portfolio of devices is perceived to have lost some its freshness in the second half the year. A reliance on iterating on already successful devices is a sensible strategy to follow if you;re looking to keep costs low, but can leave consumers uninspired by new devices.