Take Note, Samsung Hits Record Profit As HTC Profits Slump 70%

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Samsung is fast teaching their Japanese competitors a lesson in how to make a profit with a record US$5.15 quarterly profit due in part to the stunning success of the Galaxy Note smartphone which was launched late last month in Australia.Samsung’s January-March operating profit was 5.8 trillion won, almost double the year-ago level and above a consensus forecast of 5 trillion won from analysts surveyed by Thomson Reuters I/B/E/S. It also topped the preceding quarter’s previous record of 5.3 trillion won. Revenue was 45 trillion won.

Referred to as Galaxy Note “phablet” the new Samsung device is part phone, part mini-tablet, with a stylus and screen half the size of the iPad. According to the Korean manufacturer, more than 5 million Galaxy Notes have been sold since its launch in October and is proving a surprise money earner.

Samsung, which raced to the top of the global smartphone rankings, last year with close to a fifth of the market, from just 3 percent in 2009, is set to go head-to-head with Apple this quarter with the expected launch of a revamped Galaxy S III which is expected to be one of the bestselling smartphones in Australia this year.

In Australia carriers are reporting higher-than-expected sales of the Galaxy Note which is more organiser than smartphone.

Lee Ka-keun, an analyst at Hana Daetoo Securities, said: “Note sales will increase further in the second quarter, and handset profit will grow despite a rise in marketing costs related to the London Olympics.”

The Note sits somewhere between a small tablet and a big smartphone, and its early success illustrates that a maturing mobile device market can open up new opportunities as users and manufacturers experiment with form. Samsung has driven the Note with its marketing and distribution clout.

“We’re seeing a shift in the marketplace and there’s room for diversity,” says Shivesh Vishwanathan, senior solutions architect at Persistent Systems.

Put together by Samsung’s design Chief Lee Minhyouk as a smartphone “taboo breaker”, the Note increases the pressure on gadget strugglers HTC, Nokia and BlackBerry maker Research in Motion.

In comparison arch rival HTC, the world’s No.5 smartphone maker, said on Friday its January-March net profit slumped 70 percent to around $151 million, battered by competition from Apple and Samsung, though it hopes the launch of its One series will help win back some of that lost market share.

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