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Samsung Comes Up Short in the Next Evolution of the Smartphone Wars

The arms race for global smartphone superiority heated up once again Thursday night, as the second major smartphone launch of 2013 took place at New York City's Radio City Music Hall. There, South Korean electronics giant Samsung lifted the curtain on the latest edition of its best-selling Galaxy line of smartphones -- the Galaxy S4.

After a banner 2012 in which Samsung claimed the top spot for global smartphone and generated the majority of the profits among handset makers using Google's (NASDAQ: GOOGL  ) Android mobile OS, last night's launch ushered in what's likely to be the next chapter in Samsung's amazing run in the smartphone space.

Much was made of what would and wouldn't appear in the device in the week leading up to yesterday. Now that we know, here's what investors and consumers will get in Samsung's latest and greatest.

The Galaxy S4 unpacked
I was fortunate enough to attend the launch with a few fellow Fools, and one thing was abundantly clear: Samsung's strategy with this phone centers mainly on software.

Although the basic OS was the Android 4.2.2 Jelly Bean many expected, Samsung layered a number of new programs and features on top of it, all of which are aimed squarely at challenging arrival Apple (NASDAQ: AAPL  ) in their perennial battle for handset dominance. Here's a short list of some of the new software features Samsung packed into its latest handset.

Samsung repeatedly touted the idea that the S4 is more than simply a phone, calling it a "life companion." Although that sounds more like a spouse than a piece of technology, the notion is clear that the Galaxy S4 is intended to cater to every aspect of its users' increasingly mobile lives.

On the personal side of things, many of the new features center on the camera, and for good reason. The camera itself underwent a major upgrade this time around. The back-facing camera now comes in at a whopping 13 megapixels, and the front-facing camera a respectable 2 megapixels. The software supporting that camera comes with a bevy of features that allow the users to do things like use the front and back-facing camera in a single shot, include sound with pictures, and splice a sequence of images into a single frame. Definitely neat.

On the productivity side of things, Samsung touted its new Knox software, which completely segments a user's personal and professional content. This idea lines Samsung up to further tap into the BYOD movement that's gaining momentum with tech-savvy corporations. It's also been done before. Canadian smartphone maker BlackBerry (NASDAQ: BBRY  ) introduced a nearly identical feature called BlackBerry Balance when it launched its next-gen BB10 operating system in January.

And for being a software-driven phone, the hardware certainly isn't a slouch, either, keeping with the engineering theme we saw in the iPhone 5 -- bigger, thinner, faster. The screen size came in at the 5 inches many expected, up from the still-sizable 4.8-inch display of its predecessor. This screen is also capable of 1,080p quality output, all while being substantially more power efficient as well. In summation, it's an impressive device no matter how you slice it.

Mr. Market thinks differently
However, judging by the market's reaction, it seems investors are as underwhelmed as I. Shares of Samsung were down more than 2.6% on Friday, while shares of Apple rose more than 2.5%.

The problem amounts to what's arguably been the single biggest knock against Apple over the past 12 months -- that's the Galaxy S4 doesn't offer anything truly innovative or amazing. In a global smartphone market that has clearly come to expect "insanely great" with each new product cycle, this device sadly falls short by only being very good.

However, that's also not to say the phone won't be the massive commercial success most analyst expect. After all, you don't get to 100 million devices shipped without doing a few things right. Analysts have estimated that the Galaxy S4 could sell as many as 10 million units in its first month alone. However, that figure also only barely keeps Samsung ahead of the smartphone pack, and it's only mid-March. We're sure to see plenty of fireworks in the coming month, as many expect Apple that is readying its own counter-assault, maybe even sooner than normal.

Foolish bottom line
The Galaxy S4 bears an uncanny resemblance to the "Unpacked" event that introduced it to the public. It had no shortage of glitz and glamour (or song and dance, in this event's case), but it still ended up giving users less than they'd hoped for. It will sell in droves; count on that. But in an environment where investors demand more than pure sales volume, the Galaxy S4 manages only to stay slightly ahead of the pack.

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Read/Post Comments (10) | Recommend This Article (6)

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 1:14 PM, tychicum wrote:

    Samsung needs Apple to invent something new so that they can steal it.

  • Report this Comment On March 16, 2013, at 1:25 PM, AboutYourCat wrote:

    reading offerings from financial bloggers and financial analysts reminds me of watching my windshield wipers go back and forth when it rains.....

    the difference being..... my windshield wipers serve a useful purpose as they constantly change direction.....

    those people I mentioned are trying to create the illusion that they have any purpose at all.

  • Report this Comment On March 16, 2013, at 1:52 PM, gskorich wrote:

    believing your own hype is a dangerous thing. the galaxy 4 does not live up to the hype. life companion? this version of the galaxy line offers us hardware upgrades and a few gimmicks. hand gestures and eye tracking? are these standard or can we choose not to use them? what about battery life? when I think of innovation I think of a company that put the computer in the palm of my hand and did it with a cool device. Apple.

  • Report this Comment On March 16, 2013, at 3:01 PM, trixkillz wrote:

    didnt we hear this about the iPhone 4S,iPhone 5 ,and now because samsung has gotten more popular people will find everything they can wrong with it :) I Mean come it it will have an octocore proccessor

  • Report this Comment On March 16, 2013, at 3:17 PM, infektu wrote:

    "nearly identical feature" ?!?

    BlackBerry Balance is years ahead what Samsung has shown.

    Doing some research before writing stuff can work wonders.

  • Report this Comment On March 16, 2013, at 4:49 PM, Trollin4blogs wrote:

    Apple WAS great and once ruled the market.

    But then again, so was The Ford Thunderbird.

  • Report this Comment On March 16, 2013, at 4:49 PM, Wit95 wrote:

    Some may disagree, but my IPhone and all my Apple devices work flawlessly alone and together and that's why I buy Apple. It's all about the Ecosystem. That's why I ditched my PC and my old phones and went Apple, As far as Samsung, who really needs a 13MP camera to suck up memory along with hand gestures on a handheld device. It just doesn't make sense....All fluff....

  • Report this Comment On March 16, 2013, at 11:05 PM, RandomMeaning wrote:

    The Galaxy S4 says quite a bit about Samsung's goals. Which is to sell its customers to advertisers. The "Galaxy (of our customers) 4 Sale" if you like. Look at two of the "innovations" Samsung has added to their phone.

    Eye tracking. So the video pauses whenever you look away. Step back a minute and think about that. Your eyes frequently check your surroundings. This is normal. Takes fractions of a second. When do you look away from the screen for a longer period of time? When something on the screen is boring to watch for a while or something more interesting happens nearby. What's the most boring thing that pops up on streamed video? Advertising. What do TV execs complain about the most? People not watching their ads. Why don't we make it so that people can't continue on with their show without having their eyes glued to the ads?! Bingo! Eye tracking! The video will not proceed unless you are fully watching the ad (which can't be skipped). An advertisers dream.

    Hover touch or whatever they want to call it. Basically, the screen can register touches and gestures without actually touching the screen. Does this improve accuracy? Actually, no. It increases the number of accidental clicks. Most likely on the many ads splashed across most websites. In other words, as you're navigating around the page, you are much more likely to accidently "click" an ad. Does that help you? No. But it generates more clicks for advertisers.

    I've seen this gimmick before on a friend's nightmare of a Verizon netbook. Cursed thing was constantly registering a click anytime his pointer crossed over an ad. He eventually sock drawered the thing in despair.

    Naturally, both of these "features" should be easy for the user to disable. If it takes more than three steps or is presented in a confusing manner, then Samsung is going even further down the road of placing its own interests above the user.

    Even then, there are many buyers who will probably not even realize they can change it, just going with what's presented by default assuming that's they way it has to be.

    Samsung has taken one of the basic problems of Android to a whole new level: you're not just the buyer, you are also the product being sold to the advertisers and data miners. Enjoy!

  • Report this Comment On March 16, 2013, at 11:19 PM, alexkhan2000 wrote:

    Samsung had a nice run, thanks to Apple. Samsung also benefitted heavily from Apple's pricing structure, allowing them to profit handsomely at a tier below. Now Samsung will have to learn what it's like to be the chief target of many competitors, including Apple.

    The likes of Sony, HTC, LG, Huawei, ZTE, and of course Google/Motorola will have the crosshairs on Samsung - perhaps more so than Apple. The media will start turning on Samsung as well. Samsung wanted to be like Apple and now they'll have to deal with the same type of attention and scrutiny.

    Good luck, Samsung, but I don't think you'll handle the next phase as well as catching up with Apple.

  • Report this Comment On March 17, 2013, at 6:26 AM, dongennl wrote:

    I only want devices with Stock Android from now on; too much crap-ware on my S3 already.

    Nexus 4 please!

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