Everybody knows that Android vendors might sell more smartphones than Apple (Nasdaq: AAPL) -- but all the profit in the mobile industry belongs to Cupertino. The iPhone sells for a premium to other smartphones, though the consumer rarely notices because AT&T (NYSE: T) and Verizon (NYSE: VZ) are happy to defray the upfront costs with heavy discounts. As long as the phone is paired with a multiyear service plan, everybody wins -- especially Apple, which pockets record-breaking profits from its iPhone line every quarter.
Not so fast, amigo. As it turns out, Samsung (NASDAQOTH: SSNHY.PK) has figured out how to sell Android phones in high volume and at a decent profit, too.
Samsung just released its second-quarter results, and some of the numbers run against conventional smartphone-market wisdom. Let by runaway sales of its Galaxy S2 and Galaxy S3 Android-based smartphones, Sammy boosted profits by 79% year-over-year to $5.9 billion. The company keeps unit sales close to the vest, but analysts spitball about 50 million units sold this quarter. That's about double Apple's 26 million iPhone tally.
At the same time, Apple just missed Wall Street's earnings targets. The culprit? Weak iPhone sales. The bulls and Apple's management prefer the spin that consumers are holding their breath for the iPhone 5 release this fall, thus leaving handsets of the last two generations unsold on store shelves. But you can't deny that Samsung's finest hardware looks pretty nice next to an iPhone nowadays, and Google (Nasdaq: GOOG) is even bringing the Android software closer to Apple's renowned user-friendly ways.
Even in a disappointing quarter, Apple remains far more profitable than Samsung -- or any other smartphone maker. Our chief technology guru believes that Cupertino will continue to dominate the profit picture for years to come, which makes Apple a solid buy right now. He spells out exactly why in our brand-new premium report on Apple.
