General atmosphere of Samsung Unpacked 2015 featuring the Galaxy Note5 at Samsung Unpacked 2015 on August 13, 2015 in New York City. - Donald Bowers/Getty Images for Samsung/AFP
Samsung unveiled two new smartphones Thursday, the Samsung Galaxy S6 Edge+ and the Galaxy Note 5, as it looks to rebuild its mobile business as its profit sinks and competition increases.
The phones are fast, shiny, slim and everything that Samsung fans could have hoped for. The new Edge and Note are set for a retail launch on Aug. 21 and will cost $740 and $815, respectively. True to form, Samsung executives touted the company's legacy of innovation as they introduced the phones in an event strategically scheduled before Apple's traditional fall iPhone bonanza.
But will it be enough?
Samsung has been feeling the squeeze lately. It reported a seventh straight quarter of falling profit, partly because of weaker sales. Although it is still the best-selling smartphone maker in the world by volume, Samsung reaps only 15 percent of global smartphone profit. The rest goes to Apple, the second-largest smartphone seller in the world.
Samsung's strategy to compete with Apple had been to flood the market with smartphones of varying prices and let the sales of lower-end, low-profit models help offset the investment in premium models, which are more expensive to make but are also more lucrative.
But with Chinese manufacturers such as Xiaomi and Huawei sopping up the cheaper end of the market and competitors such as Motorola and LG undercutting Samsung's prices for high-end, big-screen phones, the South Korean company has had less opportunity to differentiate itself.
So while Samsung may have jump-started the trend of moving toward phablets, it now finds itself stuck in the middle as competitors have hopped on to the bandwagon.
That's a tough place to be. Just ask companies such as HTC — once a dominant maker of Android phones — which announced early Thursday that it would lay off 15,000 workers after investors sent its stock price so low last week that it essentially valued the company at zero. Samsung's situation is not nearly as dire, but the fall of HTC does illustrate how harsh the competition in the smartphone industry has become.
That is why Samsung took time during Thursday's announcement in New York to drop several veiled barbs against Apple, particularly on the subject of innovation. Samsung executives repeatedly noted that their company was the first to move to large-screen phones — which many at the time considered a gimmick but was soon copied by Apple.It also pointed to features such as the curved screen of the Galaxy S6 Edge+, with the 5.7-inch screen draping over the sides of the phone, as examples of its push to the boundaries.
The innovation argument is key to Samsung's continued success, said Ramon Llamas, an analyst at IDC. "They've been sliding in the Edge as being the next bullet in the chamber to maintain that high end of the market," he said. And although there are lots of phone-tablet hybrids on the market, he said, Samsung still leads in overall quality. "Samsung does bring that innovation, and I haven't seen anyone that's been able to replicate or flat out duplicate that," he said.
Samsung, however, needs to quell worries about its profitability and keep consumers on board as it works on its next innovative breakthrough, Llamas said. That is particularly important as the firm moves beyond smartphones and into the realm of watches, virtual-reality headsets and more.
"You need these things to bankroll your innovation in other areas, too," Llamas said. "There's a lot of dependence on the mobile communications team to fund other areas. Keeping them thriving is critical for Samsung going forward."
- Source: The Washington Post | August 14, 2015
