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Apple-Samsung rivalry intensifies with September device launches

Matt Hamblen | Aug. 13, 2013
iPhone 5S needs leading-edge innovation to stand out from cheaper, near-equal Androids, analysts said.

"Consumers are very quick to make up their minds and early marketing is key," Moorhead said. "Both Samsung and Apple want to come out of the starting blocks strong and establish their new product's position. It is critical for Apple to do so with their new fifth-generation phones."

Apple faces at least two challenges with its next launch, he said. "In established regions [such as the U.S. and Europe], Apple needs to re-create the sense with consumers that iPhones bring something very different to the table," Moorhead said. "Android has caught up in most or many ways, and Apple doesn't look different. In emerging regions, Apple's high price and limited distribution are issues for Apple."

If Apple can't successfully address such challenges, it risks losing more global market share, Moorhead said.

"After the launch, it's about how differentiated your products are," said Jack Gold, an analyst at J. Gold Associates. "I think many consumers are now getting saturated with feature creep and unable to tell the real differences with most major brands. Things like Siri ... and early iPhones were revolutionary and easy to differentiate. That's Apple's real challenge: How to differentiate and get user upgrades in a very crowded and undifferentiated market."

Gold also raised a question many others who track the mobile phone industry have: How many consumers will continue to buy high-end smartphones when they aren't that much better than the cheaper ones?

Apple faces the challenge in both emerging and mature markets of getting prices lower, Gold said. "If there's good enough technology priced well below iPhones, many customers will opt for that choice, as has largely been the case with Android," he said. (The iPhone 5C is rumored to sell for $99 on a two-year contract plan, less than half the cost of a new traditional iPhone.)

Gold said that rumors of a new iPhone 5S with a fingerprint chip and a bigger screen that would sell alongside cheaper iPhone 5C models might not be enough to differentiate Apple in the crowded market.

"The real threat to Apple comes from not offering enough innovative features in the next iteration of the iPhone to matter to consumers," Gold said. "Apple has lost quite a bit of market dominance, driving largely by others catching up or even surpassing some iPhone features. Can Apple get the mojo back? That's the real question."

 

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