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Samsung, reigning smart phone champ, preps Galaxy S III

The Galaxy S III is set to debut in the US in June. What will it mean for Samsung? 

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Reuters
JK Shin, president and head of Samsung's mobile division, unveils the Samsung Galaxy S III.
  • By Matthew Shaer

Yesterday, Samsung took the wraps off the Galaxy S III, a svelte new smartphone equipped with a 4.8-inch HD Super AMOLED screen, a 1.4GHz quad-core Exynos processor, and a June launch date.  

In a hands-on preview posted at Engadget, Mat Smith faulted Samsung for not upping the design quotient – the Galaxy S III looks not so different from other Samsung phones – but praised the display and predicted that the snappy processor which should help the Galaxy S III "spar for top spot among Android devices." So hey, what will the Galaxy S III mean for Samsung? 

Well, here's where things get interesting. According to a recent report from IDC, Samsung currently owns the biggest slice of the global smartphone market, besting even Apple, its closest competitor. In the first quarter of 2012, Samsung sold a whopping 42.2 million smartphones, compared to the 35.1 million sold by Apple. (As one reporter has pointed out, "every second smartphone sold across the world [now comes] from either Samsung or Apple.") 

But that doesn't mean that Samsung is necessarily earning more than Apple. Over at CNET, Asymco analyst Horace Dediu tells Lance Whitney that worldwide smartphone operating profits are split between only two major players: Apple, with 73 percent, and Samsung, with 26 percent. HTC, in third place, gets 1 percent of the pie. That means that everyone else is either losing money or fighting over a rounding error. 

The reason Apple makes so much money off the iPhone? Carrier subsidies, Dediu says. The iPhone helps carriers stay "competitive," CNET reports, and the carriers are willing to pay a premium for that privilege. 

"Following this value proposition to its logical conclusion would suggest that the industry is rewarding those who can supply computers-as-phones which preserve the cash flows of what is essentially a trillion dollar data services business," Dediu says. "Vendors which cannot offer this solution saw their businesses implode. At least on the high end."

And herein, we return again to the Galaxy S III, which has already inspired an iPhone-worthy puddle of drool. If Samsung can succeed in making its new device a "must-have," as the Apple smartphone is now, it could also start to rack up the kind of carrier subsidies currently enjoyed by Team Cupertino. It's a long shot, of course, but if there's one Samsung phone that could do it, it's the Galaxy S III. 

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