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Samsung devices caught between Apple and Chinese smartphones

Matt Hamblen | Aug. 4, 2015
Samsung faces competition from Apple iPhones on the high end and Chinese smartphones on the low end.

Samsung faces competition from Apple iPhones on the high end and Chinese smartphones on the low end.

The solution to the company's dilemma is complex. It isn't at all clear whether Samsung's next product announcement on Aug. 13 is going to help very much.

On that day, Samsung is expected to announce a new Galaxy Note 5 phablet and a larger Galaxy S6 Plus smartphone, according to reports and analysts. Also expected is a Tizen-based Gear A smartwatch with a round face, instead of the square or rectangular faces of its previous models.

While Samsung's dilemma is a real one, the South Korean company is still the largest smartphone maker in the world, by a big margin, with a 24% market share in the first quarter of 2015, according to Gartner.

At the same time, its smartphone shipments declined by more than 6% in the second quarter, compared to a year earlier, according to estimates from Juniper Research that were released Friday. (Gartner's second-quarter numbers will be released later this month.)

In essence, Samsung is getting squeezed at the high-end by the new Apple iPhone 6 and 6 Plus, and at the low-end, primarily, from a raft of Chinese smartphone makers, including Huawei and Xiaomi.

The Samsung Galaxy S6 and S6 Edge, released for sale in April, haven't produced the sales that Samsung had hoped for, partly because of component delays for the Edge. The company plans to cut prices for the devices in advance of shipping new phone models, it said in announcing falling sales and profits for the second quarter on Thursday. Juniper originally expected Samsung to ship as many 70 million of both smartphones by the end of 2015.

"Samsung has lost their way and needs to focus on useful and exciting innovation and align all their marketing against that," said Patrick Moorhead, an analyst at Moor Insights & Strategy, in an email. "There is room for an alternative to Apple, but Samsung just isn't playing its A game."

Moorhead's comment was tempered some by Gartner analyst Tuong Nguyen.

"It's too early to start sounding the alarm bells for Samsung," said Nguyen, in an email. "It's natural to see some share erosion when you have such a significant chunk of the market."

Nguyen added, "Samsung is the largest phone maker [because] they have a comprehensive portfolio spanning low to high, but that's also why they're facing such competition."

Both new Galaxy phones try to compete with the new high-end iPhones, but it's extremely difficult for Samsung, or any other maker, to compete in the stratosphere with Apple, Nguyen said. "The high end is strongly about brand and prestige."


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