Samsung Beats Google to Android Profits: Report

Thursday, 16 May 2013 | 5:26 AM ET
Samsung Galaxy S4 smartphone
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Samsung Galaxy S4 smartphone

Samsung has become the "undisputed king" of the Android smartphone industry, earning a bigger profit from the software made by Google than Google itself, according to new research from Strategy Analytics.

"An efficient supply chain, sleek products and crisp marketing have been among the main drivers of Samsung's impressive profitability," Woody Oh, a senior analyst at Strategy Analytics, said in the report on Wednesday.

(Read More: Google Launches Music Service, Taking on Pandora)

Strategy Analytics said Samsung captured an impressive 95 percent share of global Android smartphone profits in the first quarter of 2013, with rival LG following in second place with a mere 3 percent share of profit. The firm looked at only hardware, so for example, sales of smartphones and not sales of things such as apps.

Overall, global Android smartphone profits reached $5 billion during the quarter.

"Samsung is, for now, the undisputed king of the global Android smartphone industry," Neil Mawston, an executive director at Strategy Analytics, said in the report. "We believe Samsung generates more revenue and profit from the Android platform than Google does."

Mawston forecast Samsung might use its market power to influence the future direction of the Android ecosystem, and request first or exclusive updates of new software.

(Read More: Google Earnings Beat, but Revenue Misses)

Benedict Evans of consultancy firm Enders Analysis, told CNBC that a quarter of Android volume comes from fairly anonymous firms in China and the data were hard to report as there are no official statistics.

"I think the broader point is that Samsung and Apple between them are making a third of the volume in the global phone market, about 70 percent of the revenue and almost all the profit. This has been true for several quarters," Evans told CNBC.

It's important to remember that Google's objectives for mobile were to stop Microsoft and Apple from locking them out of the sector, expanding their mobile internet users and promoting their data-gathering software, Evans said.

"So Google is doing very well out of Android," he said. "All of the branded manufacturers except Apple and Samsung look sub-scale: they're squeezed between the big players on one hand and the generic Chinese manufacturers on the other. Some sort of consolidation looks inevitable."

Meanwhile, Google executives took to the stage at an annual developers' conference in San Francisco on Wednesday to launch updated versions of Google software, and a brand new music streaming service. Shares in the tech giant climbed 3.25 percent on the day and broke through the $900 barrier, despite ongoing fears of a decline in advertising revenue.

By CNBC.com's Matt Clinch; Follow him on Twitter @mattclinch81

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