Samsung’s Next Galaxy Is Taking This Hint From Apple
In a January 6 interview with Bloomberg, Lee Young Hee, the executive vice president of Samsung’s (SSNLF.PK) mobile business, gave the world insight on how the smartphone manufacturer is preparing its latest high-end handset — the upcoming Galaxy S5 — to compete with Apple’s (NASDAQ:AAPL) iPhones.
The device she described will be paired with a new wearable device, a further evolution of the Galaxy Gear smartwatch, and it could boast iris recognition technology, a biometric authentication application similar to Apple’s Touch ID feature. Industry rumors also suggest that Samsung will take another hint from the iPhone maker, as well: According to SamMobile, the latest Samsung offering will not be a single smartphone but a bifurcated smartphone lineup featuring a metal-clad premium edition and a cheaper plastic model.
Sales of Samsung’s flagship Galaxy S4 slowed after Apple released the iPhone 5S and 5C, and it’s clear the South Korea-based technology company is not only looking to significantly differentiate its upcoming handset from the device’s predecessor but also follow Apple’s lead, or so it appears from Hee’s comments and industry reports.
The last quarter was a difficult one for Samsung. The company may be the largest smartphone handset manufacturer in the world, selling one out of every three of the devices globally, but the company’s earnings fell in the last quarter of 2013, further supporting investors’ concerns that competitive pressures in the smartphone industry would make huge profits hard to come by in coming quarters.
Samsung is fighting a two-front battle, with Apple’s dominance of the premium market on one side and low-end smartphone manufacturers on the other.
For several years, Samsung and Apple have been competing for dominance in the high-end market. And since the release of the most recent iteration of the iPhone, Apple has gained territory. In November, the first full month the iPhone 5S and 5C were on the market, the company sold 65 percent of all smartphones priced at $400 or more worldwide, an increase from November 2012’s 35 percent, according to Counterpoint Technology Market Research, per Bloomberg.
Those numbers were calculated before Apple and China Mobile (NYSE:CHL) inked a partnership, giving the tech giant access to more than 700 million new mobile phone customers. As for Samsung, its share of the premium market dropped from 40 percent in November 2012 to 21 percent last November.
“The release of the S5 will be very important to Samsung,” IBK Securities analyst Lee Seung Woo told Bloomberg. “Competition is going to intensify, and it’s not going to be an easy year for the company.”
The device is expected to run on Google’s (NASDAQ:GOOG) Android 4.4 KitKat, be furnished with a 16-megapixel camera and an AMOLED display of 2,560-by-1,440 resolution, and be powered by the Exynos 6 processor or a Snapdragon 805, depending on whether the device is LTE-enabled.
The other issue facing Samsung is one of price: Both Apple and Samsung have to handle increasing competition from low-end devices. Ahead of the iPhone maker’s September product launch, analysts forecast the company was developing a bifurcated smartphone lineup that would allow it to capture market share in emerging markets.
Apple Insider reports the premium Galaxy device will retail for 800 euros, or $1,093, while the lower-cost Galaxy device will cost 650 euros, or $889. As Samsung’s Lee said to Bloomberg, the company is “targeting consumers who want more professional use and tend to be willing to pay more for handsets.”
So by developing two versions of its flagship device device — one a metal-clad premium edition and the other a cheaper plastic model — it could be possible that Samsung decided to develop a smartphone to employ in each of its key battles: the fight with Apple and the campaign against low-cost handset manufacturers.
More from Wall St. Cheat Sheet:
- Apple Invents Foldable iPhone Display
- Apple and China Mobile: 1M iPhones On the Way
- Will Samsung’s Brand Overtake Apple?
Follow Meghan on Twitter @MFoley_WSCS