Samsung Profits From Android While HTC Plunges

As much as Google’s Android operating system has been a boost for Samsung’s financial results, HTC shows the other side of the story.

South Korea’s Samsung, which emerged as the top seller of Android smartphones and tablets, reported a major 73 percent gain in operating profit to 5.2 trillion won (£3bn) for the quarter ending in December. Conversely, HTC, which like Samsung is locked in a patent infringement lawsuit with Apple over the designs of its Android smartphones, saw its profit fall 26 percent to 11.02 billion New Taiwan dollars from 14.8 billion NT dollars a year ago.

Profits

A big portion of Samsung’s profit came from its sale of its hard disk drive storage unit to Seagate for $1.38 billion. Samsung’s solid quarter may also be attributed to its record 300 million-plus mobile phone unit sales, with its Galaxy S and S II smartphone line representing tens of millions of unit shipments.

HTC chalked up the downfall to weaker handset sales in a competitive climate where Samsung, Nokia and Research In Motion are all jockeying for consumers’ wallets.

Not to leave HTC alone in despair, Motorola Mobility, which is in the process of selling itself to Google, warned of an earnings shortfall after the bell on 6 January, racking up sales of $3.4 billion. That’s below analyst expectations for $3.88 billion, according to Thomson Reuters.

Why are Samsung and HTC, which have made Android their flagship smartphone platforms, heading in opposite directions on the financial front? HTC, which built the first two Android phones, worked with Android creator Andy Rubin to build the Google Nexus One “pure Google experience” smartphone.

In 2010, HTC sold millions of units of the HTC Droid Incredible from Verizon Wireless and the HTC Evo 3G via Sprint. The company became the fourth largest maker of smartphones worldwide.

The tide turned in late 2010. While HTC sporadically launched its devices, seeding different carriers with different handsets, Samsung launched the Galaxy S smartphone line offering a separate device for each of the four major US carriers.

Samsung continued this success in 2011, launching the Galaxy S II models and rolling out the Galaxy Nexus as the first Android 4.0 Ice Cream Sandwich smartphone.

HTC’s biggest Android launch was the HTC Thunderbolt, which sold reasonably well as the company’s first 4G LTE (Long Term Evolution) handset on Verizon’s network in the US. The company also sold the HTC Evo 3D 4G handset for US carrier Sprint.

However, HTC also lost its chief innovation officer, Horace Luke, who drove the Android phone innovation for the company.

Samsung, which also sells smartphones based on its bada OS, is expected to sell 32 million to 35 million units in the quarter. Such numbers may only be rivaled by Apple’s iPhone, which is expected to enjoy its own record holiday quarter and total year sales.

With Samsung pacing the Android market and Motorola looking to Google for financial backing via acquisition, HTC may be the odd Android OEM out. Perhaps it will find better success with Windows Phone in 2012.