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Samsung is Continually Falling behind Apple's iPhone on Smartphone Profits


According to a new report, "Samsung has pulled out all the stops on its new Galaxy smartphones, but their modest prices compared to the latest iPhones throw an uneasy spotlight on the long-term cost of fighting Apple's premium branding."


Reuters report notes that by their calculations "The 64-gigabyte model of the Galaxy S6 edge costs $290.45 to make, according to IHS Technology. That's more expensive than any Galaxy S model and iPhone analysed by the U.S. research company. For the price of producing 100 sets of this S6 edge model, Apple can make 121 sets of 64-GB iPhone 6 Plus. In 2010, when Samsung launched the Galaxy series and Apple unveiled the iPhone 4, their production costs were almost on par.


The chief reason behind this gap is that Apple's iOS operating system and robust software and services ecosystem command a much larger premium among consumers.


Lacking those differentiators, Samsung has to offer higher quality hardware to stand out in an increasingly crowded marketplace but can't fully reflect those costs with higher retail prices."


Reuters concludes that "Should this trend persist, margins for Samsung's mobile business could be compressed further, and the only way to offset that is to rev up sales volume." That's why Samsung is so obsessed with volume disease, a term that Tim Cook recently used.



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