"Samsung profits jump as smartphone sales outstrip Apple"

After years of playing second fiddle, Samsung has finally stolen Nokia's crown as the world's biggest seller of mobile phones and left Apple's iPhone trailing in its wake.

Samsung overtook Nokia as the world's top handset maker for the first time in the first quarter. 

The Korean electronics giant saw sales of its handsets surge in the first three months of the year, helping to knock the beleaguered Finnish mobile company from the position it has occupied for 14 years.

It also managed to widen its lead over Apple as the biggest producer of smartphones, as sales of high-end handsets like the Galaxy Note and Galaxy S2 outstripped the iPhone by nearly 10m units.

Samsung shipped 44.5m smartphones during the first three months of the year, compared with 35.1m iPhones, according to research company Strategy Analytics. It is not the first time that Samsung has outsold Apple, but it is the first time that it has done so with anything like this sort of margin, which may well widen further after Samsung launches its latest device, expected to be the S3 smartphone, next week.

So far, the remarkable growth has helped to propel Samsung first-quarter net profits 81pc higher to a record 5.05 trillion won (£2.75bn), on revenues up by more than a fifth to 45.3 trillion won.

It also marks an important strategic boost for Google, whose Android computer operating system is at the heart of most Samsung phones.

Gavin Byrne, principal analyst at CCS Insight, said: "Samsung has become an aspirational brand, younger than the Nokia demographic, and it has also managed to bring down the prices of smartphones. The desire to address many different price points has helped it to ramp up volumes very quickly."

However, Apple's smartphone business still far outstripped Samsung's in terms of profitability.

The California-based technology business, whose iPhone 4S costs £499, reported lower first-quarter revenues than Samsung, but made more than double its profits at $11.6bn.

There was no such silver lining for Nokia. The company has failed to replicate that success with the new generation of smartphones and earlier this week booked a €1.34bn (£1.1bn) first-quarter loss.

But the leap in Samsung's profits masked a dramatic slowdown in demand at the company's memory chip business, where profits more than halved to 760bn won.

Meanwhile, Reuters has reported that Apple began talks earlier this year to stream films owned by EPIX, which is backed by three major movie studios - Lions Gate, MGM and Paramount Pictures - on devices including a long-anticipated TV.

Apple declined to comment on what it called "speculation." An EPIX spokesman had no comment.