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4/5/2013
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Samsung's Quarter Saved By Low-End Smartphones

Samsung's expansive line of mobile devices paid off this quarter, as strong sales of its low-end and mid-range smartphones countered weak sales of its flagships.

Samsung Galaxy S IV: What To Expect
Samsung Galaxy S IV: What To Expect
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Samsung made a lot of money during the first quarter of 2013. In fact, its profits exploded upward by 53% compared to the year-ago period. It wasn't Samsung's top-of-the-line hardware, though, that contributed to its success. Instead, it was Samsung's commitment to offer devices at every selling point in as many markets as possible.

Samsung reported total revenue of $46 billion for the quarter, which is up about 15% compared to last year. The revenues helped Samsung earn a profit of $7.7 billion. The company's revenue fell just short of Wall Street's expectations, but its profits easily surpassed the Street's targets.

Sales of Samsung's flagship devices, such as the Galaxy S 3, Galaxy Note II and Galaxy Tab 7 2, petered out during the quarter. Consumers slowed down purchases of Samsung's high-end gear in anticipation of new hardware. (Their instincts were rewarded, but we'll talk about that below.) Samsung's television and computer sales were also down. With its high-margin businesses seeing fewer sales, it's a wonder Samsung generated the revenue and profits that it did.

[ Can the One save HTC's bacon? Read For HTC, The One Can't Come Soon Enough. ]

Samsung's extensive line of entry-level and mid-range smartphones, which it makes available in emerging and developed markets, is likely what's responsible for bolstering the company's financials during the first quarter. Samsung has made significant inroads against incumbents such as Nokia in markets like India, where low-cost smartphones are the business in which to be. The company has been challenging its rivals across all price points with dozens of Galaxy-branded Android devices that are sold for less than $100.

Samsung no longer publishes data about individual device sales, however, so it is hard to create a complete picture of just how many devices it moved during the first quarter of the year.

Samsung is already positioned for a strong second quarter. In February, it announced the Galaxy Note 8, an iPad Mini competitor. This living room-friendly tablet is expected to hit the U.S. before the end of April. Pricing has yet to be announced, but expect it to fall in the $249 - $299 range in order to be competitive with the iPad Mini's $329 price.

The Samsung Galaxy S 4, its flagship smartphone for 2013, will follow shortly thereafter. In fact, several U.S. carriers are already accepting preorders for the S 4. AT&T is offering the Galaxy S 4 for $199 (16 GB) and $249 (32 GB) with a new contract. AT&T hasn't set an availability date yet. The only other carrier to offer pricing details on the Galaxy S 4 is T-Mobile USA, which is asking for a $99 down payment , presumably for the 16-GB model. T-Mobile said its Galaxy S 4 will reach store shelves around May 1. Sprint and Verizon Wireless have been quiet about their Galaxy S 4 launch plans, but expect them to launch within a week or two of their rivals.

With the Note 8 and S 4 both reaching world markets near the beginning of the second quarter, Samsung will surely have good financial news to report come July.

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