This year has been tough for Samsung's (NASDAQOTH:SSNLF) smartphone business. Although the South Korean conglomerate maintained its title of the largest smartphone manufacturer, it saw its lead drop amid competition from Apple (NASDAQ:AAPL) in the high-end market and a host of vendors in developing markets. Particularly wounding, a report earlier this year found Samsung had lost its edge in the important Chinese market to native company Xiaomi.
For years, Samsung has pursued a bifurcated strategy, focusing on both the high- and low-end markets, while Apple emphasized experience and ignored market share. The upside for Samsung was moving more units, but Apple could focus on quality and lead on customer satisfaction -- and profit margin -- with its slimmer phone portfolio. However, if the newest American Customer Satisfaction Index survey is representative, Samsung might be reversing its fortunes.
The survey says...
According to the ACSI (by way of 9to5Google), Samsung's mobile phones took the top spot for customer satisfaction with a rating of 81 (out of 100). That just edged out No. 2 Apple's score of 79. These were the only two companies to score higher than the category average of 78, with Nokia, Motorola Mobility, and HTC rounding out the top five.
Even better for Samsung was the year-over-year improvement: the company had the best gain outside of BlackBerry via a satisfaction increase of 6.6%. Satisfaction with Apple mobile phones actually dropped by 2.5%, from 81 to 79.
But this might not matter for Samsung
Unfortunately, this improved customer experience has not led to more sales for the South Korean company. After warning that its third-quarter results were going to be poor, Samsung still shocked investors by reporting an operating profit decrease of 60% from last year's corresponding quarter amid a 20% sales drop. The company directly blamed its smartphone business for its poor showing.
Later, Gartner's third-quarter mobile phone survey pointed to Samsung's struggles among its smartphone peers. Although the global smartphone market grew 20.3% from last year's corresponding quarter, Samsung saw its unit sales decrease 8.9% -- the only vendor in the top five to post a year-over-year drop. Coincidentally, Apple also came in No. 2 in this survey, but it provided a better year-over-year result by reporting unit sales growth of 25.9%, more than the overall market.
Customer satisfaction is important, but might be tenuously linked to sales
In the end, customer satisfaction is the ultimate measure of a product's success. If nobody likes your product, you're not going to be in business for long. Apple CEO Tim Cook has a long history of using customer satisfaction for a benchmark of success. Earlier this year, Cook highlighted a 98% iPad Air customer satisfaction score to answer concerns about slowing iPad sales. However, concerns about iPad growth have continued.
That might be because customer satisfaction is merely one of many considerations when shopping for a new cell phone. Price, perceived value, and ecosystem might also play into a prospective customer's definition of satisfaction. And let's not forget this is merely one survey. A recent Flurry report found that 51% of worldwide device activations during the busy Christmas week were for Apple products. Apparently Apple still has some fans, regardless of this one survey.
Jamal Carnette owns shares of Apple. The Motley Fool recommends Apple and Gartner. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
More from The Motley Fool
Here's Where State and Local Income Taxes Are Falling in 2018
Are you lucky enough to live where there are lower taxes this year?
Intel Corp.'s Upcoming Core i9-8950HK Processor Looks Incredible
This Fool is impressed.
Twitter, Inc. Earnings: Can It Return to Growth?
Could Twitter finally be profitable on a GAAP basis?