Samsung rings up record profits but battle with Apple to continue SAMSUNG yesterday appeared to have won the Christmas smartphone battle after the South Korean firm posted a record quarterly profit, while US rival Motorola sank to a loss. Strong sales of Samsung's flagship Galaxy smartphone range helped the company to post a 5.3 trillion won (£2.9 billion) operating profit in the three months to Hogmanay. Motorola meanwhile plunged to a fourth-quarter loss of $80 million (£51m) as it battled fierce competition in the smartphone and tablet computer market. The firm is still trying to complete its $12.5bn sale to Google, the computing giant that makes the Android operating system used to run many smartphones. Motorola - famous for its "Hello Moto" adverts, which were once a staple feature on television - is facing stiff competition from a host of rival phone firms, including HTC, Blackerry-maker Research in Motion (Rim) and the all-conquering Apple. Samsung had snatched Apple's crown as the world's biggest smartphone maker in the three months to 30 September. But Apple regained the upper hand in the run-up to Christmas, selling 37 million iPhones, boosted by the introduction of its 4S model. Samsung did not reveal how many handsets it had sold in the final quarter of the year, but research firm Strategy Analytics put sales at 36.5 million units, with third-ranked Nokia, based in Finland, on 19.6 million. Baik Jae-yer, a fund manager at Korea Investment Management, said: "The battle of the two big smartphone powers, Apple versus Samsung, will go on. The smartphone market will expand this year to more mid-and low-end models that are affordable to the wider public. Rather than focus on market share, I'd point out the strong contribution of Samsung's handset business to earnings growth and margins. The relationship between the two rivals is complex; Apple is Samsung's biggest client, buying mainly chips and displays. Yet the two firms are locked in a bruising patent battle about markets from the United States to Europe, and Japan to Australia, as they jostle for smartphone and tablet supremacy. Kim Young-chan, an analyst at Shinhan Investment & Securities, observed: "It's unlikely that Samsung and Apple will fight over each other's market share, but they will eat up the market share of smaller companies like HTC and Rim." Apple is streets ahead in profitability. It generates half its revenue from the iPhone, boasts a 37.4 per cent operating margin, versus Samsung's 11 per cent, and its $17.3bn operating profit is almost four times what Samsung earned from phones, chips, flat screens and TVs combined. Lee Yong-jik, a fund manager at PineBridge Investment, said: "Samsung is playing catch-up with Apple in smartphone sales volume, but it's tougher to catch up in terms of margins. Price competition will intensify, putting Samsung's handset margins under pressure.