Samsung is one of the most hotly-admired companies in the world right now. The business has been able to grow substantially as a result of launching its Samsung Galaxy S series of phones, which use the Android operating system.
The war is on
Samsung increased its spending by 58% in the United States in 2012 to catch up to Apple Inc. (NASDAQ:AAPL). Samsung’s 2012 global advertising budget was around $4.3 billion. Apple Inc. (NASDAQ:AAPL), on the other hand, had a much smaller advertising budget of $1 billion. The basic concern is that by Samsung increasing its advertising, with its recent Jay Z ad campaign along with a host of others, Apple’s competitive position within the United States could be compromised.
Samsung currently has 22% of the total market share in the United States. It has only grown by 0.6% after rapidly increasing advertising spending by 58% in the previous fiscal year. Samsung is likely to increase the amount of money spent on advertising even further going into fiscal year 2013. The company isn’t willing to take any risks, and cannot afford to lose its foothold in the United States smart phone market.
Currently 21% of teenagers are planning to make their next smart phone purchase an Android. Samsung would need to go blow up its advertising to make sure that more than 21% of teens buy an android.
Apple Inc. (NASDAQ:AAPL) shareholders may be feeling threatened. While Apple has a lot of Untied States and European market share, it is behind the competition in other markets, and cannot afford to lose any bit of market share to Samsung. Apple Inc. (NASDAQ:AAPL) closed below $400 per share and at the time of writing it is trading at $391 per share.
Samsung only has 19% of the tablet market, with Apple iPad’s and Mini’s combined holding onto 67% of the United States tablet market.
For now, I think the scare in Apple Inc. (NASDAQ:AAPL) is over-hyped (though I will explain the technical side of the argument in another article.) IDC projects that the smart phone market will grow at a 16% compound annual growth rate until 2017. Taiwan SemiconductorManufacturing projects 23% compound annual growth rate in tablet devices until 2017.
Based on the growth rates projected for both smart phone and tablet devices, it is perhaps more intelligent to stick with Apple’s stock rather than dumping it because of short-term market volatility. Yes, sometimes being a buy and hold can stink. For now, though, investors should remain patient and stay the course with Apple Inc. (NASDAQ:AAPL).
Microsoft & Nokia the unlikely duo
Investors should consider Microsoft Corporation (NASDAQ:MSFT). Microsoft Corporation (NASDAQ:MSFT) is likely to gain market share in the United States because 5% of survey respondents amongst the younger demographic were thinking of making the switch over to Windows Phone 8. This is aided by the fact that the Windows metro interface is becoming increasingly familiar to the average user. Nokia Corporation (ADR) (NYSE:NOK) is coming to the market with some new handset devices which could be industry changing. Nokia Corporation (ADR) (NYSE:NOK) has 18% global phone market share (including both regular and smart phones); its greatest weakness has been in the high-end. But with Microsoft Corporation (NASDAQ:MSFT)’s buttery-smooth Windows Phone 8 mobile operating system, maybe the awful days of Symbian can come to a close. Nokia’s greatest advantage of using the Windows Phone 8 operating system is the compatibility of the device with other devices in the Windows ecosystem like the Microsoft Corporation (NASDAQ:MSFT) Surface Pro and a standard Dell desktop computer.