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Apple puts the big hurt on Samsung

Matt Hamblen | Feb. 2, 2015
2015 will be a challenging year for the Korean phone maker, but there are steps Samsung can take to reverse its declining market share.

"The Galaxy S5 sold horribly and had a significant impact on Samsung's profitability last year," said Kevin Burden, an analyst at 451 Research.

Patrick Moorhead, an analyst at Moor Insights & Strategy, said U.S.buyers perceived the Galaxy S5's plastic case as "cheap." Plus, the phone had new technologies that consumers didn't find valuable, such as a heart rate monitor. "Samsung has to do a better job aligning their technological capabilities with what consumers are asking for and new innovations that they can create," he said.

"Samsung's biggest issue is that they failed in 2014 to innovate and build upon the success they were having over the past five years," added IDC's Reith. "They have very much stayed stagnant, in terms of brand image, device lineup and marketing. The Galaxy S line should have been a three-year, three-device strategy, with another completely different sub-brand to follow-on. Instead, it is almost six years now and becoming stale."

The coming Galaxy S6
While Samsung need to end the Galaxy S line, there are already reports indicating that Samsung will produce a Galaxy S6, probably to be unveiled at Mobile World Congress in March.

Rumors suggest the Galaxy S6 could have Samsung's own in-house Exynos processor, instead of a Qualcomm 64-bit Snapdragon 810, which has been found to be susceptible to overheating problems.

Using its Exynos processor, Samsung could save on costs and flex its technology muscles, but better styling and other features are what may more important in Galaxy S6. Some pundits have suggested the device needs an "Edge" version, where the screen wraps around one side, but even the value of the Edge technology isn't a proven market winner.

"We are hearing rumors of a Galaxy S6 announcement at Mobile World Congress and if so, my guess is that it won't be well-received," Reith said. "This is the time when Samsung needs to launch something new in its product line, its brand, its messaging and overall value proposition."

The China effect
While Samsung may need to overhaul its smartphones, there's little question it is being hurt by a range of cheaper smartphones, mainly from at least 10 Chinese manufacturers.

IDC put Lenovo, Huawei and Xiaomi -- all based in China -- in third, fourth and fifth place in total shipments in the fourth quarter behind Samsung and Apple.

Apple has always been seen as a premium brand and hasn't competed in the low-cost smartphone segment. Even so, Apple walloped the smartphone market in China in the fourth quarter of 2014, doubling its sales over the prior year, and accounting for 22% of Apple's overall sales for the quarter. Apple managed to attract customers to its high-end iPhones in China, a feat that's been out of reach for Samsung.


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