The Two-Horse Smartphone Race

Apple and Samsung should make it abundantly clear this week that the smartphone industry is increasingly dividing into the haves and have-nots. The two companies are expected to report record earnings for the first three months of the year, largely on the strength of smartphone sales. They together ship nearly half of all smartphones, pushing aside weakened competitors such as Nokia, HTC Corp., and Research In Motion.

Yet Apple and Samsung—two rivals separated by about 5,000 miles—have climbed to the top using very different playbooks. Apple, the world's most valuable company, sells just one phone, the iPhone. The company emphasizes design and profitability over sales. It also invests heavily in its consumer brand and its tightly controlled retail stores, and it benefits from a strong ecosystem of software and apps. Meanwhile, Samsung, the world's largest tech company by revenue last year, goes for scale. The South Korean company is a fast-follower that places its bets broadly, creating multiple versions of myriad products such as its Galaxy smartphones to suit partners' needs. It maximizes profits by controlling its own manufacturing. Their divergent paths are proof that vastly different models can prevail. Apple and Samsung are each close to commanding 25% of the global market share of smartphone unit shipments, according to research firm IDC, which estimates the smartphone market will reach $219 billion in sales in 2012.