The Samsung Bull Market Just Replaced the Android Bull Market
Samsung has completely knocked Motorola and HTC out of commission within the Android smartphone marketplace.
Remember the good old days, when the smartphone market was more than a two-horse race between Apple (AAPL) and Samsung?
Now, we all know the struggles Research In Motion (RIMM) has experienced in battling the iPhone and Google (GOOG) Android juggernauts.
But perhaps the most interesting smartphone-industry trend we've seen in recent months has been the utter collapse of competitiveness within the Android ecosystem.
Samsung's emergence as the dominant Android-phone producer became apparent on October 31 of last year, when Taiwanese smartphone maker HTC first warned of weak sales of its previously hot smartphones.
On that day, in Minyanville's Buzz & Banter (click here for a free two-wee trial), I asked: "Could this be a canary in the coal mine for the booming smartphone industry?"
With the benefit of 20/20 hindsight, the answer to that question was YES! -- for everyone not named Apple or Samsung.
HTC delivered two subsequent warnings, including this morning's revelation that first-quarter revenues will come in 24% below consensus.
And in early January, Motorola Mobility (MMI) pre-announced truly dismal fourth-quarter results, including just 8% year-over-year growth in smartphones. (See Motorola Results Point to Apple, Samsung Dominance.)
So effectively, Samsung knocked off the two smartphone makers that actually helped get the Android market off the ground in the first place.
The Android bull market is long gone, replaced by the Samsung bull market.
In fact, Samsung isn't just squeaking by -- it's actually rolling in record profits while its two key Android competitors are facing tough times.
We were early in identifying the Apple/Samsung dominance trend, but I was truly surprised at just how powerful the combination has been.
Market-research firm NPD just reported its fourth-quarter smartphone numbers for the US market, and the numbers are staggering.
91% of smartphone buyers opted for Apple or Android smartphones, though Android garnered a larger weighting of first-time buyers, as you can see here:
But that was obvious. But what was really interesting is that the five best-selling smartphones were all Apple and Samsung:
1. Apple iPhone 4S
2. Apple iPhone 4
3. Apple iPhone 3GS
4. Samsung GALAXY S II
5. Samsung GALAXY S 4G
Now technically, this data is not a surprise, especially since we learned from Strategy Analytics last week that Samsung and Apple accounted for 86% of smartphone industry growth in the first quarter. The companies' combined sales rose 173% versus 10% for the rest of the industry (see Samsung and Apple Now Account for Smartphone Industry Growth).
However, NPD's inclusion of data for first-time smartphone buyers is a pretty interesting wrinkle, since if Samsung is dominating the Android market and the Android market is drawing more first-time smartphone buyers, then a whole lot of folks' first introductions to smartphones are via Samsung.
Since Samsung's recent phones have all been pretty dang good, it should be able to hold onto all these new folks.
The news is also a big reminder that if you're hanging onto semiconductor stocks that are levered to the smartphone industry, I would be extremely wary of any names with heavy exposure to Apple and Samsung's competitors. In fact, I suspect that Sandisk (SNDK) disappointed on January 25 simply because unlike, say, Qualcomm (QCOM), it doesn't have the right customers.
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