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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 case in China is less that Samsung is getting pushed around by Apple as they are feeling the pressure from Chinese vendors that are hungry and satisfied with low-digit profit margins," Reith said. "At the same time that Apple is clearly not letting up, Lenovo, Huawei and Xiaomi are all gunning for the top."

While Samsung gets drubbed for not being more innovative in smartphones, it is simply harder to be innovative with lower-priced smartphones that cut out expensive features, Gold noted. At the low end, "you have newcomers with new models like those from Xiaomi that have stolen a lot of Samsung's thunder," he said.

Changes needed for Samsung's smartphone brand
Samsung seems to miss something basic that Apple is really good at: Long-term market research about what technologies matter most to buyers and the ability to act on those insights.

To that point, Apple took several years before increasing the size of its iPhones, finally deciding on a 4.7-in. display size in the iPhone 6 and the 5.5-in. screen of the iPhone 6 Plus. Apple saw the larger-sized smartphone market trend proven repeatedly, then responded, and has reaped the benefits.

Samsung had been making larger smartphones and so-called phablets for years before Apple, especially with the Galaxy Note line. But at the same time, Samsung introduced each year what turned out to be an array of unpopular technologies, especially in its custom user interface and services, to which many Android customers have balked.

"To regain momentum, Samsung needs to have something different and appealing to the consumer around the corner," Reith said. "Possibly it's a rebranding of some sort, rather than another device with 15 different unusable technologies. It's going to be a challenging road ahead for them."

As part of buffing up its smartphone brand, Gold said Samsung has to establish a more "comprehensive user experience that creates some level of loyalty and lock-in. They haven't been able to do that and are unlikely to in the short run. They really don't have any end-user ecosystem to speak of."

nike hints apples wearable plans go beyond apple watchAppleThe Apple Watch.

By contrast, Apple has a "tremendous" ecosystem, Gold said, which translates into "brand lock-in and loyalty." Apple offers the "complete experience" with quality devices, matched with services like iTunes and an enormous App Store.

"People are basically buying a device from Samsung and not the complete experience that Apple offers," Gold said. As a result, Samsung loses out if a better device from another vendor comes along, meaning a Galaxy S5 customer might easily jump to an HTC One, or another phone.

The Apple ecosystem comes closer to what Google does with all Android services and smartphones, but Samsung can't take full advantage of the Android ecosystem because it competes with other Android smartphone vendors, Gold said.


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