Samsung’s shadow grows darker

Samsung Marketing AdvertisingImage Source: Nan Palmero, Flickr

HTC was once the top-selling smartphone vendor in the United States. It wasn’t even that long ago. The Taiwan-based vendor reported six consecutive months of record revenue in 2011 before it ran into a brick wall known as the iPhone 4S. Since then, things have been tumbling downhill for HTC, culminating in the company’s worst-ever quarterly performance that saw profits plummet 98% in Q1 2013. Fierce competition from Apple is one reason HTC has seen its profits evaporate over the past year and a half, but another company has likely caused even more trouble for the struggling smartphone vendor: Samsung.

Samsung’s shadow over the Android market has grown darker than ever before. In the first quarter of 2013, Samsung shipped a staggering 69.4 million smartphones according to market research firm Strategy Analytics. That figure is good for a 33.1% share of the global smartphone market. LG, the next-closest Android vendor in Q1, controlled less than 5% of the market worldwide.

A number of factors have contributed to Samsung’s meteoric rise, and its massive sales and marketing budget likely sits at the top of the list. In 2012, Samsung spent a combined $9.3 billion on marketing, advertising and other promotional activities according to recent estimates from Asymco analyst Horace Dediu. During the first quarter of 2013, Enders Analysis’ Benedict Evans estimates that Samsung spent somewhere around $2.5 billion on sales and marketing.

HTC, on the other hand, spent just $130 million last quarter on sales and marketing activities, according to the company’s Q1 earnings report. Using Evans’s estimate, Samsung spent about 19 times more than HTC on marketing, advertising and related activities last quarter.

The recent launch of the flagship HTC One is expected to help the vendor’s revenue rebound in the second quarter this year, but the marketing and advertising campaigns Samsung is launching to promote its own new flagship phone, the Galaxy S4, will undoubtedly turn plenty of attention away from HTC.

Samsung said in a presentation alongside its first-quarter earnings report that its marketing expenses decreased in Q1 2013, just as they did in the same quarter last year, but expect that trend to reverse now that the Galaxy S4 has begun rolling out around the world. Competing with Samsung’s stunning new flagship phone is no easy task, regardless of how impressive HTC’s own flagship smartphone may be. Add in the billions of dollars Samsung will spend to promote its new phone, and that task may be insurmountable.

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