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Even in the fast-paced world of high tech, 10 weeks is a short amount of time.
And yet, as recently as early September, many industry analysts were saying Apple Inc. (Nasdaq: AAPL) had lost its innovative edge in the global smartphone war.
That's when the Silicon Valley legend launched the iPhone 6 with two larger screen sizes, 4.7 and 5.5 inches.
Almost overnight there was a growing chorus of critics who said Apple was falling behind Samsung Electronics Co. Ltd. (OTCMKTS: SSNLF).
On paper, the criticism made sense. After all, Samsung launched a version of its Android-powered Galaxy with a 4.8-inch screen back in May 2012.
But the pro-Samsung story line fails to account for two key facts. First, Apple remains the most profitable smartphone company in the world by far.
And second, despite all the hoopla around the firm's large-screen units, Samsung's smartphone business is in financial decline.
Less than a month ago, Samsung announced it's cutting the number of smartphone models by a whopping 30%.
It's much worse than it sounds – Samsung is looking backwards at the worst possible moment.
I'm not saying that Samsung is throwing in the towel on smartphones but it is working hard on Plan B. The company recently announced it will invest nearly $15 billion to build a new semiconductor plant.
So, even though Samsung remains the top global smartphone maker by market share, it is quickly falling behind Apple where it matters most – the making of money.
The (Mostly) Undisputed Smartphone King
Consider that as I was preparing this note to you, The Wall Street Journal reported that Samsung is set to reassign the head of its mobile phone operations, who also serves as co-CEO, to other duties.
I'm not surprised. Samsung's net profits in the third period were, frankly, a disaster, falling some 49%.
Weakening smartphone margins were a key factor in that decline. They fell from 15% over the last 10 quarters to just 7% in the period – the lowest since 2009.
All of this occurs as Apple is just crushing with its glitzy new iPhones.
After selling a record 10 million units in the opening weekend, the company has gone on to ship nearly 40 million new iPhones. It also reached $24 billion in iPhone sales last quarter, up 21% annually.
Compared with Samsung's earnings, Apple is in a class by itself. The Silicon Valley legend had fourth fiscal quarter net profit of $8.5 billion, a 13.3% increase year over year.
The two companies have starkly different recent sales records. Samsung had $45 billion in revenue in the most recent quarter – a 20% drop from the same quarter last year. Apple reported a 12.3% jump to $42.1 billion.
Ironically, Samsung this year offered buyers 56 models to choose from, 11 times as many as Apple.
More to the point, Apple is way ahead in a field known as unified computing. Its iPhones seamlessly communicate with Mac computers and iPads in a way that Samsung just can't match.
In other words, the iPhone is more than just an elegant mobile device – it's part of a tech ecosystem that keeps Apple customers coming back for more products.
The Race to Fill a $53 Billion Niche
And let's not forget that when Apple launched its new iPhone it also announced the new Apple Watch.
With its sleek design, great operating system, and link to the iPhone, the watch is set to shake up the burgeoning world of wearable technology, a market that is growing by more than 75% a year.
Juniper Research sees global retail sales of wearables reaching $53.2 billion by 2019. And Gartner expects the global wearables market to reach 111.9 million units shipped in 2018, with much of this growth fueled by the Apple Watch.
Gartner also expects that by 2016 around 40% of wrist-worn consumer devices will be smartwatches. And it estimates that by 2017 wearable devices will account for roughly half of all app usage.
Slated to come out in early 2015, Apple Watch is primed to be Apple's next big device score, following in the footsteps of the iconic iPhone, iPad, and iPod before it.
Meanwhile its sleek design modifications will offer stylish sophistication, functional brilliance, and sporty durability.
About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top technology financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
Michael is 100% independent and receives absolutely no compensation from companies he writes about. His ideas are completely his own.
So, it probably goes without saying that you won't ever be left in the dark about breaking innovations, ahead-of-their-time technologies, and breakout companies on the cusp of changing the world once you join this world.