Apple Inc.’s iPhone outsold smartphones from rival Samsung Electronics Co Ltd in the fourth quarter (Q4) of 2014 for this first time since 2011. Apple sold 74.83 million iPhones worldwide compared to 73.03 million smartphones sold by Samsung, according to figures published yesterday by Gartner.

Apple reported record quarterly net profit of $18 billion for its first quarter ended December 27 to become the most profitable public company in history. This result was due mainly to the overwhelming success of its large-screen iPhone 6 and iPhone 6 Plus, launched ahead of the Christmas shopping season.

Apple sold 49 percent more iPhones in Q4 2014 than it did in Q4 2013 while Samsung, the smartphone market leader since 2011, recorded a decline of 14 percent in unit sold.

In January, Samsung reported a 64 percent decline in earnings from its mobile division for the quarter ended December 31, marking the fifth quarter running to deliver an earnings decline.

“Samsung continues to struggle to control its falling smartphone share, which was at its highest in the third quarter of 2013,” said Anshul Gupta, principal research analyst at Gartner. “This downward trend shows that Samsung’s share of profitable premium smartphone users has come under significant pressure.”

Last week separate research by Strategy Analytics showed that Apple’s iOS accounted for 89 percent of all smartphone operating profits in Q4 2014.

It is not just Apple’s iPhone that had a negative impact on Samsung’s smartphone sales. Chinese smartphone manufacturers, such as Huawei and Xiaomi, continued to increase sales of mid to low-end smartphones in China and overseas markets.

“Chinese vendors are no longer followers,” said Roberta Cozza, research director at Gartner. “They are producing higher quality devices with appealing new hardware features that can rival the more established players in the mobile phone market. Brand building and marketing will be key activities in deciding which Chinese vendors can secure a foothold in mature markets.”

Cozza offered some advice on how Samsung could potentially win back customers in the premium handset market:

“With Apple dominating the premium phone market and the Chinese vendors increasingly offering quality hardware at lower prices, it is through a solid ecosystem of apps, content and services unique to Samsung devices that Samsung can secure more loyalty and longer-term differentiation at the high end of the market,” said Cozza.

Samsung unveiled its new flagship Galaxy S6 and Galaxy S6 Edge smartphones on Sunday.  Along with Samsung, the market will be watching to see if the new devices are enough to reverse Samsung’s fortunes.

photo credit: Apple iPhone 6 Plus via photopin (license)