Joseph Palenchar On Mar 25 2013 - 12:00am

Analysts: Samsung Poised To Unseat Apple In U.S.

 

NEW YORK — The launch of the Galaxy S4 smartphone puts Samsung in a stronger position to unseat Apple as the dominant seller of smartphones in the U.S., but the launch of the flagship Android phone also highlights challenges that Samsung faces in fending off competitors, multiple analysts said.

The phone will be available through 327 carriers in 155 countries starting at the end of April, said J.K. Shin, president of Samsung’s mobile communications business. U.S. carriers AT&T, Cricket, Sprint, T-Mobile, Verizon and U.S. Cellular will offer the phone but haven’t revealed a price or availability date.

Samsung leads Apple worldwide in smartphone shipments, but in the U.S., Samsung is in second place, although it raised its 2012 share of retail-level unit purchases by consumers to 28 percent from 2011’s 16 percent, The NPD Group statistics show. That put Samsung only 5 percentage points behind Apple’s 2012 share of 33 percent. In 2011, in contrast, Samsung lagged farther behind Apple, which posted a 31 percent share to Samsung’s 16 percent.

Analysts polled by TWICE agree the Android 4.2.2 S4 will be a major success, given impressive hardware specifications, a laundry list of advanced features, the emergence of a Galaxy “fan base” similar to the iPhone fan base, and a marketing budget that one analyst said hit $400 million to $600 million worldwide to support Galaxy S3 sales.

With the S4 launch, Samsung has the potential to topple Apple as the nation’s highest volume smartphone shipper in 2013, Informa principal analyst Malik Kamal-Saadi told TWICE. But such a dramatic share shift would happen only if Apple makes some missteps, he said, such as not bringing enough innovation to the next-generation iPhone or holding off an introduction until October instead of launching in July or August.

Whatever happens, “Apple will definitely lose market share in the U.S. in 2013,” he said, but not just because of Samsung competition but also from competition with new flagship phones from HTC, LG, and BlackBerry, he said.

IDC analyst Ramon Llamas also sees the potential for Samsung to unseat Apple for top billing in U.S. smartphone sales in 2013, but he also cautioned that “a lot of dominoes would have to fall into place.” A share shift of that significance will “depend on what Apple does or does not do and what Samsung does.” Whatever happens, the launch of the S4 “puts more pressure on Apple” to innovate, he said.

At a minimum, the S4 will “help maintain Samsung’s momentum,” Llamas said. “A lot of people have warmed up to the brand,” he said.

Though the S4 launch will rachet up pressure on Apple, the launch also underscored the potential for Samsung to slip in the future, some analysts said.

Despite the S4’s advances, analysts have called the device evolutionary rather than revolutionary, and one of them, Ovum chief telecom analyst Jan Dawson, said the launch “highlights a couple of the key challenges Samsung faces.”

“Samsung now faces essentially the same challenge as Apple — how to continue to improve its devices year on year when existing phones are already top of their class, and there aren’t obvious shortcomings,” Dawson said. The second challenge is how to set Samsung’s devices apart from other Android rivals, such as HTC and Sony, who are also raising the specs of their devices. “It becomes more and more important for Samsung to differentiate on software and services,” he said.

Some improvements, such as eye tracking, “can be seen as gimmicks rather than game changers,” he pointed out. “At this point, Samsung appears to be trying to kill the competition with sheer volume of new features. There should be something here for everyone, even if most of these new features won’t be used by most users.”

For now, Samsung can “likely rely on its vastly superior marketing budget and the relatively weak efforts of its competitors in software to keep it ahead,” he said. But competitors will catch up, and Samsung “will need to continue to stretch.” The company “needs to build a stronger set of content offerings that cross its various platforms so that it can extend its leadership in smartphones into the tablet space and give consumers a reason to buy into an ‘all-Samsung’ experience with their consumer electronics,” he added.

For his part, Informa’s Kamal-Saadi said he believes Samsung is already making progress in differentiating its Android phones from other Android phones. “Samsung is taking Galaxy away from the Android ecosystem” by offering “unique features, services and apps exclusively for Samsung phones.”

Analyst Jeff Kagan also expects the S4 to be a hit, but he said Samsung “only partially answered” the question of “what makes this phone special?” Many of the phone’s features are similar to those of other handset makers, he said.

IDC’s Llamas agreed that other handset vendors already offer many of the features and hardware specifications offered by the S4, but he noted, “It’s going to be a whole collection of features that make the S4 stand out.”

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