As the world's biggest technology company, Samsung (
SSNLF
,
quote
) is well-positioned to profit from the growth of the middle class
in emerging markets.
[caption id="attachment_58078" align="alignright" width="300"
caption="Samsung is reaching out to grasp emerging market
countries."]
[/caption]
Based in South Korea, Samsung already sells more mobile phones
than any other company in the world. Earlier this year it
supplanted Nokia (
NOK
,
quote
). Even more significant, Samsung sells more smart phones in China
than Apple (
AAPL
,
quote
).
In addition to replacing Nokia as number one for smart phones
globally, Samsung is likely to gain even more from the decline of
the stumbling Finnish communications giant. Nokia is very strong in
emerging market countries. Now trading around $2.20 a share, it
does not appear Nokia will be around much longer.
As the consumer class develops more in emerging markets, more
people are buying technology items for business and personal use.
At present, there are more than one billion cell phone subscribers
in China alone -- and more of them have Samsung phones than any
other. Where Samsung sells more to is
the burgeoning emerging markets middle class, as it has
more offerings at lower price points than Apple.
This positions Samsung well. The major growth will be at the
lower ends of the market. Most of those in China who want
higher-end smart phones already have one. It has certainly been
accounted for in the share price of Apple. Future low end buyers
for mobile phones from emerging markets have
not been factored into the price share of
Samsung
.
The South Korean tech titan reported very strong earnings
earlier this year.
Second quarter earnings are expected to be even more
robust
due to increased smart phone sales. The company is obviously very
confident in its position at the lower end of the mobile phone
market, as it has not made a move to acquire Nokia, despite its
plunging share price.
If Samsung had bought Nokia it would combine the number one and
two mobile phone makers in the world. But it has been sure enough
of its goods and services that it has not made any offers for
Nokia. That shows how well situated Samsung is to capitalize on the
expanding middle class in emerging markets.
