Is the iPhone Killer Finally Here?

The strange reality is that as much as I love my iPhone, I was hoping that the new Samsung Galaxy S4 that was released Thursday night would be the iPhone Killer that we had all been promised. I do not know if this feeling is born of an irritation with Apple's (NASDAQ: AAPL  ) poor stock performance -- although I am not a shareholder -- or perhaps the emptiness of an iPhone 5 that was only a minor uptick from my iPhone 4S. Maybe it is evidence that Samsung's enormous marketing budget is having the desired effect. Based on the early information that has been released surrounding the new device, it is another significant step forward for Samsung, but the iPhone shall live to fight another day.

Details of the Galaxy S4
When Samsung boldly debuted the new flagship smartphone in its first U.S. release to date, it was immediately clear that the Galaxy S4 was full of new features that would make it a formidable competitor among premium smartphones. Despite being smaller than the Galaxy S III, the new model has a larger screen by virtue of the fact that a greater proportion of the phone's real estate is used. The camera gets an upgrade to an impressive 13 megapixels, and it weighs less.

In terms of new features, the phone can detect when users glance away from the screen when video plays, pausing the video until you look back at the screen. Scrolling can be accomplished by either tilting the phone while browsing or through the use of various hand gestures that do not require the user to actually touch the screen. A real focus of the S4 is to allow users to more easily interact with it while performing other tasks like driving or eating. Hand gestures make it easier to scroll songs without losing focus on the road and the hover feature -- whereby information is displayed when you hover you finger over an object or folder -- allows you to keep your screen clean when your hands are messy.

Carolina Milanesi, an analyst at Gartner, said "[Samsung] kind of cherry-picked features that other competitors had, and then packed them up all together into one device." While this is not a ringing endorsement, new device is packed with functionality.

The initial reviews
Not surprisingly, the initial reviews of the new device are broadly mixed. ISI Group's Brian Marshall wrote: "In our view, the S4 possesses all the relevant new features for an industry-leading product. Most importantly, it features a large canvas (i.e., 5.0" AMOLED display) which we believe is critical as users look to converge smartphone and tablet functionality into one device." Apple has been very reticent to enter the phablet world, so Samsung's move squarely in that direction will put even greater pressure on the iPhone maker to consider offering such a product.

On the other end of the spectrum, Ovum chief telecom analyst Jan Dawson believes that the breadth of new features "are good steps in this direction, but they can be seen as gimmicks rather than game changers. At this point, Samsung appears to be trying to kill the competition with sheer volume of new features." Some complained that the iPhone 5 really was not enough of an advance, and it appears Samsung's trying to avoid that possible criticism.

Perhaps the most notable observation about the new device came from Milanesi, who said:

The story though is more about who Samsung is and where they want to be. It is clear today that they want to play in an ecosystem game, their own ecosystem. The word Android didn't come up once.

Particularly given the struggles faced recently by Google's (NASDAQ: GOOGL  ) Motorola division, the lack of much fanfare for the Android operating system is notable. While Google does not need to own this space, much of the theory behind the Motorola acquisition was to remain relevant. As Samsung remains the only serious hardware challenger to Apple, Google investors should remain vigilant.

The verdict
It is difficult to pinpoint exactly why the Galaxy S4 is not the true iPhone killer I was looking for it to be. It may be that with all of the recent hype around Google Glass and the Apple iWatch, I just wanted more. The new Samsung smartphone is a legitimate threat to iPhone sales to be sure, and has the potential to cost Cupertino shareholders, but it has not changed the game. To kill the iPhone, a product will need to be so vastly superior that it eliminates all doubt -- that is the level of superiority that Apple has secured for itself. This is the best attack yet, but Apple should get one more chance.

There's no doubt that Apple is at the center of technology's largest revolution ever, and that longtime shareholders have been handsomely rewarded with over 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.


Read/Post Comments (7) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 16, 2013, at 1:50 AM, applefan1 wrote:

    Pausing the screen just because you looked away is either the dumbest idea I've heard or people are that gullible that's its actually going to work well.

    Hand gestures on a device that you hold in your hands is another DUMB, STUPID idea.

    The only thing Samsung managed to do was cram a more powerful processor with a bigger screen and a higher resolution camera and make it slimmer.

    But the OS? Sorry, it's still Android. To me, since it's 5 inches, it's more of a phablet than a smartphone. I wonder how many people that bought the SI, SII, SIII, are going to want something even bigger? I wonder how much this is going to affect Note and Note II and Note III sales.

  • Report this Comment On March 16, 2013, at 4:32 AM, fauxscot wrote:

    Wow. A bigger screen on a fragmented OS and a barometer, too.

    Yes. This will certainly make up for the other 100 advantages an iPhone carries, such as ecosystem, apps, content, reliability, quality factors, integration, maintenance of the OS, a product spectrum, integration with a desktop/tablet line, best in class customer service, style, appropriate size, Siri, an upgrade path, low to no cost S3 models, battery life.

    At the same time, Apple is reeling under the weight of only having $150,000,000,000 in cash and investments to spend on its advertising and product development efforts. How long can that possibly last when the Samsung wolf is barking at the door. Why, that's what Samsung will spend in marketing in only 50 or 100 years.

    I guess the only worry I have is that most of the reviews of the Galaxy are lukewarm, there's no price or ship date, and it's too big to use unless you are a mesomorph with a tire pressure IQ.

    Yep, Apple is doomed. Run for the exits.

  • Report this Comment On March 16, 2013, at 5:48 AM, secularinvestor wrote:

    The Galaxy S4 is no game changer. Most of the new features are just software. It is doubtful that a screen 0.2 of an inch bigger is likely to persuade many to change to the S4 who had not previously changed to the S3.

    There was some very significant research by Kantar last summer that showed that 30% of smartphone buyers would prefer a larger screen like the S3. However, that means that 70% of smartphone users do NOT PREFER a larger screen.

    Interestingly this 30:70 ratio almost exactly reflects the ratio of Galaxies shipped since their launch (100m) to iPhones sold in that same period 268m. (Source Reuters)

    Most of the new S4 features are software, several of which are in fact catchup features copying Apple and other makers. If the S4 was an iPhone then users would be able to upgrade FOR FREE to the latest iOS version to get most of these software features and upgrades. But because of Samsung's and Android's fragmentation and forking problems, S2 and S3 owners are once again orphaned and left stranded with out of date software because they can't upgrade their OS to get the S4 software features. Their only option is to shell out more $$ and buy the S4.

    However, this leads to Samsung LOSING users! Surveys show that every time time Samsung and Android owners decide (or are forced) to upgrade around 25% change to another OS, Apple being the main beneficiary

    Apple's vertical and horizontal integration of software and hardware and the way iOS is backward compatible as well as compatible across iTouchs, iPhones and iPads is one of the reasons that Apple devices always score far higher in user satisfaction and retention ratings. This along with Apple's far larger and higher quality eco-system results in Apple's extraordinary stickiness i.e. surveys show that in addition to the resulting "Halo" effect around 95% of Apple users intending to buy another smartphone will buy an iPhone again rather than change brands.

    This was clearly demonstrated in last quarter's results when according to Strategy Analytics iPhones outsold Galaxies by MORE THAN 3 TIMES. i.e 47.8m iPhones SOLD for real $$$ compared to just 15.4m Galaxy S3s "SHIPPED" (not actually sold), most of which had to be shifted off shelves by deep discounts of S3's and Galaxy tablets which began as soon as the iPhone 5 and iPad mini were launched.

  • Report this Comment On March 16, 2013, at 7:40 AM, H3D wrote:

    Considering the time difference, the S4 is much less of a contender than the S3 was.

    And since the S3 is unable to outsell the significantly older iPhone 4S, I doubt that the S4 will have much impact on the iPhone 5S/6.

    But hey, you need your headlines to get your clicks.

  • Report this Comment On March 16, 2013, at 12:29 PM, techy46 wrote:

    S4 is full of cheap tricks and looks cheap too.

  • Report this Comment On March 16, 2013, at 3:16 PM, HardRock747 wrote:

    "Is the iPhone Killer Finally Here?"

    Sorry, but no.

  • Report this Comment On March 17, 2013, at 1:38 AM, simon129 wrote:

    Why are we still looking for an iPhone "killer"? For those brainwashed (sorry) individuals who will find any reason whatsoever to believe they have the best phone possible (which is a silly concept in itself, actually), there never will be an iPhone killer.

    The only important factor for this marketplace is something we on an investment forum should be considering above all else, and that's whether Samsung will make a massive profit out of the sale of these devices. They are already the largest smartphone seller on the planet and are dominating several significant marketplaces (I am visiting Asia right now and nobody is buying an iPhone anymore - it's all about Samsung). As an Apple shareholder, I hope they are able to change this by coming out with something new and exciting soon, because right now they have lost the most important quality in this marketplace; Apple iPhones are no longer cool.

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