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Samsung’s path back to top is far from certain, warn analysts

Paul Lipscombe
April 11, 2018

Galaxy S9 divides opinion as vendor seeks to overhaul Apple at top of smartphone market

Samsung has its work cut out to overhaul Apple and regain its position at the top of the smartphone market, according to analysts.

Experts are divided on whether the new Samsung Galaxy S9 range will propel Samsung back to the number-one position after it fell behind Apple in Q4 of last year.

According to figures from analyst firm IDC, Samsung dropped 3.2 per cent in shipments from the previous quarter, with Apple gaining 7.3 per cent in the same period.

The Korean manufacturer shipped 74.5 million smartphones in Q4 of 2017, but this was a decline of four per cent from the total in 2016, while Apple shipped 77.5 million units.

Twenty-four hours prior to the unveiling at Mobile World Congress (MWC), Samsung scored a slight own goal as a leaked video revealed the new flagship smartphone to the world. While it was eventually removed, the video circulated for enough people to see it.

The S9 is the ninth smartphone released in the Galaxy series and followed the worldwide success of the S8, a device that saw Samsung dominate market share for most of 2017.

With many features of the S9 leaked prior to the launch at MWC in Barcelona, it was anyone’s guess as to how Samsung was going to unveil its new flagship device.

So when it was finally launched it was no surprise that the S9 was something of an incremental upgrade from its predecessor.

The introduction of a more user-friendly fingerprint sensor and a more enhanced rear dual-aperture lens appear to be the two most distinct changes. Several analysts had their say on the S9  and were divided as to whether the new smartphone will see Samsung take leadership of the market.

Last year, figures highlighted just how big an influence Samsung has in the UK market.

Statistics provided by Canalys revealed that in total Samsung shipped 1.5 million Galaxy S8 devices and a further 796,000 S8+ smartphones in Q2, Q3 and Q4 combined.

Overall, Samsung shipped 6.4 million smartphones into the UK in 2017, making up a considerable amount of the  20 million smartphones shipped into the country.

It came as little surprise that Samsung fell behind in Q4, given this is typically when Apple launches new flagship devices.

With Apple unveiling the iPhone 8 and iPhone X smartphones in the final quarter of 2017 (September) this was arguably expected.

Battle For Leadership 

The lack of innovation in the S9 might make it more difficult than previously for Samsung to take back number-one spot.

According to Decision Tech senior commercial manager Thom Bryan, the industry is crying out for something to shake it up.

He said: “There is a lot of work still to be done and Samsung is not displaying the innovation to do it.

“The market moves quickly, but I don’t see it happening anytime soon, unless it is sitting on some world-class cutting edge technology for its anniversary handset.

“I think as industry experts and mobile phone users, we’re all waiting for the bar to be raised.”

Canalys technology analyst Ben Stanton offered a different opinion. He believes Samsung will regain its number-one spot.

He said: “Apple will occasionally take Q4 mainly because its launch cycle is so stacked into Q3. Everything is a lot less seasonal for Samsung,typically it will ship more.”

But while he recognised Samsung ships more phones, Stanton did acknowledge that Apple leads when it comes to the value shipped, mainly due to its push for the premium phones.

He added: “I’m convinced Samsung will beat Apple again in total phones shipped but Apple always comes out on top in total value shipped.

A real challenge for Samsung is shifting people away from the cheaper phones and right into the Galaxy S and Note series phones.”

Apple announced in February that revenue at the end of Q4 was at $88.3 billion (£62.79 billion) which represents a 13 per cent increase for the same quarter last year.

According to Apple, it was the biggest quarter the business has ever had. While Samsung didn’t have as strong a fourth quarter as Apple, it did announce a consolidated revenue of 65.98 trillion KRW (£44.6 billion) for the end of the Q4.

Samsung announced a total revenue of 239.58 trillion KRW (£161.9 billion) for 2017, with an operating profit of 53.65 trillion KRW (£36.3 billion).

As for IT and mobile phone sales in Q4, Samsung posted 25.47 trillion KRW (£17.2 billion) and an operating profit of 2.42 trillion KRW (£1.6 billion).

Proven Design

With all attention in Barcelona on Samsung, the Korean technology giant needed to deliver on the big stage as it has done in the past. First impressions are everything and with the S9 it needed to nail it.

Unlike in 2016, when Facebook founder Mark Zuckerberg showed up to help launch the S7, the S9 launch didn’t have that ‘bigname’ element to it.

At the launch instead was CCS Insight mobile analyst Ben Wood. With 15 years in the mobile industry and currently leading research at CCS, Wood spoke to Mobile News to give his thoughts on the device and the launch itself.

He said: “I don’t think you can call it a launch – it was a show, a tremendous show which added some ‘wow’ to what would have otherwise been a pretty dull launch because we knew the aspects the device would offer.”

Wood spoke of the challenge Samsung faced ahead of the unveiling, as the S9 and S9+ were arguably the “leakiest phones” ever seen before an official launch date.

“I went to MWC wondering what Samsung is going to do to get people excited about its device. In the face of adversity I thought it did a fantastic job with the launch.”

Considered by many to be nothing more than an incremental upgrade, it is evident that the S9 has kept in place the same design as its previous model. Wood sees this as an advantage.

He added:“The device is a proven design already; it was successful with the S8. Samsung made small modifications, such as moving the fingerprint sensor to a more logical position, and has improved the performance with a faster processor.”

Offering a slightly different take on the S9, Stanton said he doesn’t believe the smartphone will do enough to sell itself like the S8.

“It’s an iterative upgrade; nothing was too surprising in terms of what Samsung announced,” he said.

“The design language is really similar to the previous model. In terms of features does it have a killer application that the S8 doesn’t have? I would say no. Is it going to be enough to convince S8 users? Probably not.”

With retailers still ranging the S8 model, it might well prove difficult for Samsung to persuade consumers to plump for the S9.

Stanton added: “The biggest challenge for Samsung is going to be convincing people to go for this phone rather than the heavily discounted S8 which is still ranged.”

Iterative Year

For all the criticisms that the S9 might receive regarding its seemingly minor updates, there are still noticeable new features.

The exciting rear dual-aperture lens is a welcome addition for anyone who loves photography and this particular feature which Samsung says ‘adapts like the human eye’ will adjust to the environment you find yourself in, bright or dark.

This inclusion will no doubt please those who want to take selfies or capture special moments and this enhanced update will make it easier to do so.

Stanton, although appreciative of the improved dual-aperture lens, believes consumers aren’t too bothered about this type of thing.

He said: “The dual-aperture lens is enhanced with the S9 and S9 Plus. I’ve been using both phones in the last couple of weeks and low lying shots are excellent. The challenge is that consumers don’t care.

“Mass market doesn’t understand camera technology beyond megapixels.” Stanton did, however, point to this year being a year minimal change in business attitude for the company and that is just part of the game with regards to implementing a new smartphone.

Stanton said: “It’s a quality phone in what is an iterative year for Samsung. Every company has them; Apple had three years in a row.”

The lack of a complete overhaul isn’t necessarily a bad thing, according to uSwitch technology expert Ernest Doku.

“It rounds off a lot of edges that people felt were undercooked. When you’ve got such a strong skeleton in the S8, to refine it in the S9 was a smart decision.”

In terms of pricing, Samsung is retailing the S9 for £739 and the S9+ at £869, which are both considerably cheaper than competitors Apple who are selling the iPhone X from £999.

Impressed by the affordability aspect of the device, Doku added: “The S9 has done what it has needed to do rather than try and wow with expensive tweaks and iterations. It doesn’t do too much to price it too prohibitively.”

Bryan agrees with Doku. He added: “The ‘if it isn’t broke, don’t fix it’ attitude will serve Samsung well in the coming year.

“While it didn’t do anything hugely innovative, it also didn’t do anything drastic to upset fans of the current set up.”

Who will want to buy the phone? Samsung will have a big audience in mind with regards to the S9. Although by no means cheap at £739 if you wanted to buy it outright, the price is considerably cheaper than the iPhone X.

Although people halfway through an S8 contract might not feel compelled to upgrade just yet, those who have older models such as the S6 or S7 might be interested in the latest upgrade.

“From what we’ve seen at the moment the S9 is really casting its net wide with a compelling price.

“Samsung focused heavily on making it a mass market flagship phone. It’s a refinement, it’s good for Samsung owners who have been out of the cycle for a couple of years,” says Doku.

Wood believes the S9 is ideal for anyone who wants the best phone but doesn’t want to get an iPhone.

He said: “It’s that existing heartland of Samsung customers that it will be targeting.

“People with the S6 or S7 can look to upgrade to a Galaxy device.” Agreeing with Wood, regarding the S9 being an alternative to an iPhone, Bryan thinks those who weren’t sold on the iPhone X might be tempted to grab and S9 instead.

“The S9 has something for everyone, whether that be for business or for pleasure. In terms of aesthetics, it is a sleeker handset than the iPhone X, so those that appreciate the ‘notch’ on the X may be tempted to give it a try” says Bryan.

Virtual Assistant

It’s fair to say there is a lot going on with regards to voice recognition across a wide range of technology and Samsung, through Bixby, is no exception. Amazon and Google have been producing high-end virtual assistants with Amazon Echo and Google Home.

With this in mind, Samsung has a challenge to produce software just as

The challenge for Samsung in this particular field appears to be getting people to use Bixby when they could opt for the already more successful rivals.

The S9 retains the button specific to Bixby, but will users actually make use of this or choose to disable the feature?

Bryan believes Samsung has worked hard over the last year to ensure Bixby will be more user-friendly for the S9 than it had been on the S8.

“I think we can all agree that Bixby did not live up to expectations last year, I’m not surprised to see that Samsung has spent the last 12 months improving it with the S9.

It has added functionality to simply switch Bixby off for those who prefer “OK Google” to “Hi Bixby” but the success or failure of this will be partially down to the quality of the Samsung Smart Speaker announced at MWC which is due in H2,” said Bryan.

It is clear the virtual assistant is growing. While offering praise for Bixby, Doku did warn of the struggle it faces.

“The smart assistant market is an emerging one; you have to be seen doing something to stay relevant. Bixby has its strengths and it’s a strong smart assistant. It emulates a lot of functionality similar to others.

However, there’s not been enough reason for people not to opt for Amazon or Google. There is going to be a battle for dominance in that space,” Doku said.

Echoing similar views on Bixby, Stanton said: “Samsung has a huge challenge on its hands to get consumers to accept Bixby given the fantastic start that Amazon has had with Alexa and rivals like Google and Apple too.”

“Samsung wants to be able to offer a voice interface across all parts of its business, whether you’re talking to a fridge, TV, washing machine etc.

Bixby is a cross device solution and the most important device is the phone so it’s logical for them to use it,” Stanton added.

Anniversary Plans?

Next year will mark 10 years since Samsung launched the Galaxy S range, so it wouldn’t be too naive to think Samsung may have something planned for the next flagship smartphone in around 12 months’ time.

With Apple making a big deal to celebrate its 10-year anniversary with the iPhone X, the chances of Samsung following suit is certainly not out of the question.

This might be why Samsung has not changed too much with the S9. The potential for more of a revamp next year might pose a better strategy going forward to market a phone celebrating an anniversary.

Doku said: “It is becoming more challenging to make an impact in a market where smartphones are becoming increasingly similar.

“It is long overdue for something to shake up the market. The iPhone X has had an impact, although a relatively limited one due to its high price.”

Stanton believes Samsung will already know what it has planned for next year.  He added: “A lot of what Samsung does is decided 18 months in advance.

“Samsung will absolutely know at this stage what its next flagship device will look like and what its features will be. “It is possible Samsung is holding back but at this stage it’s impossible to say what it will or won’t do.”

Wood, however, doesn’t believe Samsung has held back but might instead look to innovate something different next year.

He added: “Samsung doesn’t hold back, it has got great technology and I don’t believe it held anything back with the S9.

“The same way Apple made a big splash with its 10th anniversary, Samsung will want to do the same. Maybe this is an incremental step and we’ll see a more radical design in the S10, given Samsung’s history.”

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