After unprecedented weeks of speculation and rumours, Samsung finally announced the Galaxy S4 mobile phone last night in New York. Never before has a Samsung smartphone caught so much interest. This shows how strong the brand has become in recent years, but it also shows that Samsung is one of the most innovative phone makers.
And end-users have already recognised it. On the other hand all the media buzz is driven by a single question: will this device be able to challenge Apple and impact the market in an unprecedented way? I believe the Samsung Galaxy S4 may represent an important milestone for the Korean company as it may become the first smartphone to outsell an iPhone.
By the end of 2011 Samsung overtook Apple and became the biggest smartphone maker in the world. In 2012 Samsung shipped 218 million smartphones, 30% of total worldwide smartphone shipments. The success of its large portfolio and transition from the mid-tier to the high-end has granted Samsung a solid first position in a very competitive market. Samsung does have areas in which it can improve, most notably with average selling price of its devices.
Apple has maintained the ability to keep its smartphone prices at a premium compared to that of Samsung. Second, Samsung has yet to have an individual model which has outsold any individual Apple smartphone. For example, in 2012 Apple shipments totalled $USD 96.5 billion, 33% of the total worldwide market value, followed by Samsung with 31% or $USD 91.5 billion.
When looking at individual models Apple continued to outsell the Samsung flagship devices. The Galaxy portfolio (Galaxy S, Galaxy S II and Galaxy S III) shipped less volume than the iPhone “portfolio” (iPhone 3S, 4, 4S and iPhone 5). Samsung has been sustaining its market share on the mid/low tier smartphones. The Samsung Galaxy S4 can be a game changer for Samsung. I believe for the first time this device has the potential to outsell the next generation of iPhone, assuming that Apple will incrementally improve the next version of the iPhone.
From the hardware perspective Samsung improved the body of the device, which now looks and feels better than the Galaxy S III. The body is covered with a metal band, which gives it a premium look and feel. At the same time the plastic backing, which was found on previous Galaxy devices, is still present. Samsung clearly needs to innovate its device materials to keep up with the developments seen from HTC, Sony, or even Nokia.
What really stands out is the range of software features that Samsung announced at the event. The company has utilised the device sensors, including new features like temperature and humidity, to gain an advantage by differentiating from its competitors.
By launching the Galaxy S4 by the end of April, as opposed to June or July, Samsung will take advantage of an almost exclusive sales period of several months where high-end competition is minimal. This will put pressure on Apple to further innovate the launch of the next iPhone. I believe this will make competition at the high-end of the market extremely difficult for competitors possibly forcing them to focus on low margin opportunity.