Apple and Samsung Could Be Dethroned by Asus' Radical New Device

When it comes to the U.S. smartphone market, it's mostly a two-horse race. Cumulatively, Apple (NASDAQ: AAPL  ) and Samsung (NASDAQOTH: SSNLF  ) sell two out of every three smartphones, with smaller manufacturers such as HTC and Motorola fighting for what's left.

But that could change next year, when Asus brings its PadFone to the United States. The device, powered by Google's (NASDAQ: GOOGL  ) Android, is particularly revolutionary and has the potential to disrupt the mobile market.

Asus' PadFone combines a tablet with a smartphone
The term "phablet" has arisen to define phones such as Samsung's Galaxy Note III -- too small to be a tablet, yet too large to be a smartphone: a hybrid of form factors. But Asus' PadFone might be the ultimate phablet: Buyers get both a tablet and smartphone, but none of the trade-offs that traditional phablets entail.

Normally, the PadFone Infinity is a standard, 5-inch smartphone running Google's Android. It has a high-end processor and 13-megapixel camera. In other words, it's largely indistinguishable from many other Android smartphones. But it has one huge advantage over its competitors -- a proprietary dock.

The PadFone Infinity comes with a 10.1-inch touchscreen dock. By inserting the phone into the dock, owners can transform their 5-inch smartphone into a 10.1-inch Android tablet. Take it out of the dock, and you're back to a standard smartphone.

Google would benefit from the emergence of another Android player
Buyers of the PadFone Infinity are basically getting two devices in one. Instead of buying Samsung's Galaxy S4 and a Galaxy Note 10.1 or Apple's iPhone 5s and full-size iPad, consumers can simply get Asus' PadFone. Pricing for the PadFone in the U.S. has not yet been announced, but as long as carriers continue to subsidize handsets, it could be more cost effective for consumers to buy a PadFone instead of two separate devices.

The rise of Asus as a major Android OEM would be great for Google, as the company has reportedly grown uneasy with Samsung's dominance. About two-thirds of all smartphones running Google's mobile operating system are made by Samsung, and Samsung is now starting to steer Android for its own benefit.

Samsung held its first developers conference back in October, where it encouraged Android developers to customize their apps for its hardware; meanwhile, Samsung's Galaxy Gear smartwatch forces owners to use Samsung's app store in place of Google Play.

It's not hard to see why Samsung would do this -- it's pretty easy to make the jump from a Samsung device to another handset running Google's operating system: Anything purchased through Google Play (apps, books, music) easily carries over, while the basic functionality is largely unchanged.

Could the PadFone Threaten Apple?
Apple doesn't have to worry about this: If consumers need iOS, they have no choice but to go with an Apple-made handset. Apple customers are notoriously loyal, possibly because of these lock-in effects -- transferring apps, music, and books purchased through iTunes to Android is difficult or impossible.

But if Asus' PadFone catches it on, it could still take its toll on Apple in other ways. For instance, there is some evidence to suggest that a chunk of Apple iPad owners use smartphones powered by Google's operating system: InfoScout reports that, on Black Friday, 40% of iPad purchases went to Android smartphone users.

But if their Android smartphone also doubles as their tablet, Android owners might have little incentive to buy that Apple-made iPad. Moreover, if the PadFone concept catches on, even some Apple diehards might be enticed to make the switch -- as larger-screen Android smartphones may have attracted some iPhone buyers, so may the savings of a two-in-one device.

A hybrid device that actually makes sense
It's too early to say whether the PadFone will be a hit in the U.S. -- but if priced appropriately, I could definitely see it catching on. Microsoft has been widely criticized for attempting to create a hybrid desktop/tablet with Windows 8, but the hybrid of a tablet/smartphone actually makes sense -- for the most part, Apple's iPhone only differs from its iPad in terms of screen size.

If Asus does find success, it could be a hinderance to Samsung, which has risen to dominate Android -- more competition for Samsung, however, is beneficial to Google. Apple's monopoly of iOS should help it to retain most of its customers, but it could lose some iPad sales, and a few Apple faithful might even make the switch.

Asus' PadFone could be the most significant smartphone released in U.S. next year; investors in the space should definitely keep an eye on it.

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Read/Post Comments (43) | Recommend This Article (21)

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 December 15, 2013, at 6:38 PM, MIKE001 wrote:

    they already have competition it is nokia soon to Microsoft phones. I love how people discount NOKIA AND WINDOWS . I LOVE IT BECAUSE WINDOWS HAS GROWN 125% IN EUROPE SO THE ONLY MARKET LEFT IS HERE AND THAT WILL HAPPEN TO. discount all you want and laugh all you want it will happen.

  • Report this Comment On December 15, 2013, at 6:40 PM, DolonAltekar wrote:

    Dumbest headline ever.

  • Report this Comment On December 15, 2013, at 6:41 PM, boldog03 wrote:

    This sounds like crap.

  • Report this Comment On December 15, 2013, at 6:45 PM, boldog03 wrote:

    Mike001 Windows and Nokia will do what they always do sell to the poor at rock bottom prices making very little in profit, also windows users rarely buy apps the true money maker, so windows market my grow, but apple and Samsung could slip 200% and still be more profitable.

  • Report this Comment On December 15, 2013, at 6:45 PM, knyghtwolf53 wrote:

    My significant other already has one. She bought it direct from China already set up unlocked and ready for any carrier. It is unbelievable in the potential of this device. She loves it, I just want a phone that works, give me that and I am a happy camper. I have a laptop and desktop, don't need a smart phone to access the internet, its too small to read anyway.

  • Report this Comment On December 15, 2013, at 10:30 PM, qunungnagruq wrote:

    First the padfone, then the tamponfone.....NOT.

  • Report this Comment On December 15, 2013, at 11:42 PM, AAPLrealist wrote:

    Welcome to Sam's Clickbait Shop. Unfounded speculation, tired innuendo and amateur blogging is the specialty. Apple bashing a daily event. Useless drivel guaranteed. Fool indeed.

    I suggest you spend your time at a place with actual industry knowledge and credibility.

  • Report this Comment On December 16, 2013, at 12:35 AM, supersnake427 wrote:

    Didn't Motorola come out with something similar to this a few years ago? Yeah they did, there was a smartphone model by Motorola that had 11" computer accessory that you could dock the phone into so you could full size processing, but it did poorly if I remember correctly because the computer dock as an accessory was prices at $500. I wouldn't call it revolutionary on Asus part, just smart move to actually include the dock.

  • Report this Comment On December 16, 2013, at 12:56 AM, forsaken803 wrote:

    Amazon has them for sale for 739.00 unlocked and the specs look good for what it is , now if the carriers will pick it up and subsidize part of the cost you will see them for about $200 with contract .

  • Report this Comment On December 16, 2013, at 1:16 AM, deasystems wrote:

    Ridiculous.

  • Report this Comment On December 16, 2013, at 2:22 AM, skippywonder wrote:

    People love docking stations. That's why everyone uses their laptops with full size monitors, just like everyone who was selling a docking station said we would.

  • Report this Comment On December 16, 2013, at 2:24 AM, Chillycat wrote:

    Very much looking forward to seeing this device combination. Having been a system builder for over 15 years, i've always considered Asus to have the finest build quality.

    It's going to be an uphill struggle to compete in an already established market, but if anyone mfg. can do it ? = Asus is the one !

  • Report this Comment On December 16, 2013, at 2:28 AM, Ineely wrote:

    I Don't know why I even waste the time to post on stupid articles like this other than to say it really irritates me and the person who as hired to write this story should follow Nasa's position of the past early 60's space days program ideas, and resign and allow a monkey to start writing the tech articles. 1st the article is so lame in content and basic Ideology its pathetic. I mean it really disturbs me that these so called Journalist- Writers will write-report anything look at (Matt Lauer for goodness sake), to keep a job. 2nd the pure concept of this as though it were not thought of years ago is proof how desperate this writer is. This is nothing new since Competing phones first started exploring ridiculously larger screens, just to try and use it as a desperate selling tool. Whats coming next? What are we all going to rush down and purchase the new 60" Giga-Screen Phone-Entertainment Experience device? 3rd. Nobody wants this crap, Companies tried to break through the Tablet market for years and it didn't even come close to success until Apple Mostly Marketed it with a smart approach as they have mostly done for years to sell their all their successful products. This is not a new concept or topic even worth discussing, because It's been tried and done. Someone needs to buy this writer and all those like him the poplar over used T-Shirts that desperately Pronounce "Been There Tried to be successful by trying to fool people into discussing this as though I was the 1st to think it up". No Company from the New Processor Home "PC" Era to the now Futuristic sounding New Lame Change the Tech Name every week Tech names and Expressions have never been successful and accomplishing this. Trust me I have read too many thousands of articles on this type of desperate stories. Look at the So called Industry people GIVE IT A REST, and let the future unfold as it will. Call it a higher Power;s calling or Karma or whatever you are dumb enough to think you can sneak it past the mind of the readers with. The fact is even the lamest Tech minded person is over exposed to all these articles and Awful and Exceedingly high amount discussion or Propaganda or what you will. Look how fast the basic understanding of new Digital TV signals and HDTV screens or units whatever you choose to call them with its 720 or1080, to Plasma, LCD, LED, Progressive Scanning and not, 3D, so forth and so on until you drown i these acronyms. Lets Lay it down People return to Important things like Family, Keeping Government in check, as well as ourselves.

  • Report this Comment On December 16, 2013, at 3:13 AM, bigstan wrote:

    Dumbest article on this site yet and that is saying something.

  • Report this Comment On December 16, 2013, at 3:25 AM, smartfone wrote:

    Sorry, but Asus still does not get it. Next!

  • Report this Comment On December 16, 2013, at 4:27 AM, JohnWee wrote:

    First I saw a YouTube over a year ago on this product - so this not new news. Best thing to do is go to certain sites that sell numerous tech products and read their customer reviews of Asus customer service. I think then and only then could you project whether a company's 'revolutionary' product has promise for the future.

  • Report this Comment On December 16, 2013, at 6:46 AM, Dewitall1 wrote:

    I just like the idea that Samsung might be at least winded for a bit. I had 5 Galaxy S 3s. Twenty useless apps and a whole lot of nonsense for "The Next Big Thing" plus continual hardware issues. Samsung needs brought down a bit. Hopefully Asus can step up in the United States Market. Asus is quality. Apple has such a corner on things and let's admit it - iOS works, all the apps for iOS work, no hardware or proprietary software issues that us Android users have to deal with. If you like 'simplicity' and a rock-solid take it or leave it proprietary design that works across all your devices - go see Apple. If your just a geek that likes to do what YOU want with your phone without being prevented, then try Android. If you hate Google's creepiness and Apple's sovereignty, go BlackBerry or FF or Ubuntu. If you don't care, just get a flip phone - no one needs any of the overblown bullcrap we kill ourselves and wait in line for hours for.

    Me? I use a Nexus 5. No BS. I can deal with Google's creepiness.

  • Report this Comment On December 16, 2013, at 7:40 AM, Dragonroll wrote:

    If it performs as well (as bad) as its motherboards, then this product will fail miserably.

  • Report this Comment On December 16, 2013, at 7:40 AM, jonnyboy455 wrote:

    wow this article deserves one big eyeroll, people dont want a tablet with the same processing power as a phone and they dont want a phone that is too big to fit in your hand, also certain things I dont want to watch on my phone therefore i dont need to have them on my phone taking up memory....like movies. so you might say "well why not have extra memory or a way to increase processing power?" well then pretty much what you have then is a tablet that would work exactly the same as say docking your phone to your tablet now...except now you have to. this is just like the brilliant idea of putting dvd players in your tv. why didnt that take off? because with electronics you want to upgrade what you can when you can. Dvd players are obsolete now but a tv from 5 even 10 years ago is workable so you would want to probably buy a blueray before your new tv......this will be the same. you would have to upgrade both in order to upgrade one so you would be stuck until you could afford the new upgrade

  • Report this Comment On December 16, 2013, at 7:47 AM, rodp77 wrote:

    Why don't they just skip the Tablet and go with the big screen TV?

  • Report this Comment On December 16, 2013, at 8:51 AM, normgarry wrote:

    Acer? Asus? It's all the same cheap garbage from China. Their PC towers are crap and so are their mobile devices. They'll never dethrone ANYBODY. This is about selling an ECOSYSTEM. iOS and Android control the markets and Samsung makes the best android phones. They won't let anyone interfere with their monopolies.

    The real problem is the carriers. All iPads should have LTE as well as ALL tablets. We should be able to simply login to different devices and access our data connections without having to pay "tethering" fees. Either that or tethering between iOS devices: iPhone and iPad should be FREE. If I am paying for 10GB of Data, I should be able to use it however I want.

    I don't want a "Phablet". I want iOS running on a 4.8 or 5" display. I was using my iPhone5 this morning and remarked how much easier it is to use than having to boot up a PC/ laptop and go on the internet - especially when I was on bus trip. I enjoy being able to easily pocket such a powerful devices and I'm waiting for the new iPhone with a bigger display.

    I'm not going to buy my apps over again on an Asus - nor abandon the downloaded content I already purchased. I'm still using productivity apps I bought on iPhone 3G.

  • Report this Comment On December 16, 2013, at 9:16 AM, blahblah1211 wrote:

    So when everyone stopped laughing after seeing the word Asus....they all thought..its a mini?? wow that's original..

  • Report this Comment On December 16, 2013, at 11:53 AM, Burstedbladder wrote:

    My Samsung Galaxy SII is working just fine for me, and I have no use for a new device until mine breaks down.

  • Report this Comment On December 16, 2013, at 12:01 PM, alexkhan2000 wrote:

    Wow, Sam. You sure are DUMB.

  • Report this Comment On December 16, 2013, at 12:23 PM, qwaserity wrote:

    WOW. This is just plain sucky journalism. If I would rehash year old information like this in my journalism article I would first be accused of plagerism then laughed out of class for writing such an outdated piece. See the follow:

    http://www.engadget.com/2012/06/12/asus-padfone-review/

  • Report this Comment On December 16, 2013, at 12:29 PM, doawithlife wrote:

    Normgarry.

    That speed in booting has already been stolen by MS for their tablet hybrids. I wont go in to details but it has to do with keeping part of the OS (or iOS) running on the ram.

    A few Android phones had this first, but they ran through the battery quickly. Apple honed the idea so it wouldn't drain to much power. MS then took the finished idea and adapted it to the Surface Pro.

    Full OS, be online in about 4 seconds flat from the thing being turned off.

    That being said, wouldn't you prefer OSx on a phone and have the ability to choose between full Apple apps and the more basic versions you already get for your phone?

    If you only want phone apps, then don't use the full Apple apps. I am sure Apple will do a better job then the Metro OS for Win 8 Pro.

    *A phone running an ARM cpu(android/iphone/current windows phones) can not run 90% of PC/OSx applications. a PC, laptop, or phone running x86 can run both phone apps and anything else your heart can desire.

  • Report this Comment On December 16, 2013, at 12:47 PM, drbldr wrote:

    It's almost funny how the article and a few of the comments should have a disclaimer that reads "this message brought to you by Asus". Clearly they either paid someone to write this or the author is an investor in the company. At least I hope one of these is true. Otherwise, this may be one of the worst unbiased consumer predictions of 2013, if not the decade.

  • Report this Comment On December 16, 2013, at 1:01 PM, DURHAMDREW wrote:

    Too bad I have zero F #@$S left or I'd invest all of my money in this. Yup, the internet is the place to go for stock tips.

  • Report this Comment On December 16, 2013, at 1:34 PM, Colinmb123 wrote:

    So they rehash the Motorola Atrix and it is somehow revolutionary? Will that device ever get any recognition? It had a fingerprint scanner (yet apples iPhone 5s is supposedly revolutionary) and it had a docking station that gave you a 10" screen and keyboard (yet this Asus one is the revolutionary one). If they had gotten the pricing right on that and utilized Apples "fill-em with BS about being trendy and they'll pay anything" advertising scheme Motorola probably wouldn't have been bought out by Google.

  • Report this Comment On December 16, 2013, at 1:43 PM, briancork wrote:

    This fascinates me. I believe this would be Asus actually taking us all, collectively, backward. Mind you, we can SKYPE an FaceTime on our iPads. So, the author neglects to make that point. However, back in 2000 an 2001, Handspring came-up with the VISOR Deluxe. This converted your Handspring PDA (a Palm knock-off) into a mobile phone that integrated your contacts. That was cool. Read more, here: http://lnkd.in/dDzF_tq

  • Report this Comment On December 16, 2013, at 5:44 PM, Kehino wrote:

    Wow ASUS may be able to take the spot from Samsung but it not be for long , remember Samsung is having problems with products catching fire and bad customer services, so does ASUS their customer service stinks . Google Tablets was made by ASUS , they will have a lot more problem with several copy right violations as they are still not ready to play in the big league .

  • Report this Comment On December 16, 2013, at 6:19 PM, JackBaker1 wrote:

    How is it that this inane article remained at the top of the Yahoo page all day?

  • Report this Comment On December 16, 2013, at 6:22 PM, JackBaker1 wrote:

    Congrats Sam.

    You retain the Motley Fool Clown of the Year Award.

  • Report this Comment On December 16, 2013, at 7:04 PM, johnestromjr wrote:

    Ah, I should have guessed.. Delusional Sam at it again. He HOPES Asus new device makes iPhones obsolete. He WANTS them to make Apple's iPhones obsolete. He PRAYS for it.

    Trouble with Delusional Sam is that he is clueless as to why Apple continues to be THE favorite device. It is about 'build quality' and a 'sticky' ecosystem that allows ANY Apple device to interface with any other Apple device and it's just plain enjoyable to use. Android devices can't all interact with one another, the build quality is just "OK" and they aren't that 'fun' to use. Can Asus overcome all of those Apple device attributes? Even if they could [they can't - at least for a few years] why would someone happy with their iPhone and iPad ditch them for an Asus device that has no proven record. It took Apple years to develop their massive following and they've ALWAYS remained loyal to that customer base. So long as Apple puts out a VERY high build quality, continues to support those devices with a massive number of applications and keeps their devices FUN to use - neither Android or Micrsoft has a chance.

    The good news is there IS competition so if you would rather have an Android - go for it. If you would rather have a Microsoft device. Again, go for it. But there won't be the same level of ecosystem - or even close.

    And, Sam, isn't Asus's new device an Android device which will have the same fragmentation as all the others? Even with a superior device they will lose to Apple. To quote that eminent philosopher, Nancy Pelosi, "Embrace the suck".

  • Report this Comment On December 17, 2013, at 12:23 AM, almirk wrote:

    I am not sure what is so revolutionary about this product, as Motorola had a similar device a few years back when it introduced the Motorola Droid Razr and the Thunderbolt. You were able to buy a 10'' screen with a dock for the phone for I believe it was around 250-300 dollars.

  • Report this Comment On December 17, 2013, at 3:03 AM, jhf678 wrote:

    Pictures please.

  • Report this Comment On December 17, 2013, at 3:16 AM, thethreestooges wrote:

    Sam, your headline should read

    "Here is HTC PadFone"

    no need to exaggerate with silly wishful headline paid for by HTC.

  • Report this Comment On December 17, 2013, at 3:17 AM, thethreestooges wrote:

    sorry, it is ASUS PadFone, eh?

  • Report this Comment On December 17, 2013, at 9:11 AM, derezz wrote:

    I'm sorry but does no one remember the AT&T I believe it was that had the Motorola Atrix? Basically the same god damn thing Asus is going to release. The Atrix fizzled out almost right after it's launch. Thanks but no thanks. I'll stick with the Note 2 until the S5 is released. No phone/tablet/laptop combinations for me. Good on Asus though for going through with this. Apple needs to be chopped down a notch anyway.

  • Report this Comment On December 17, 2013, at 11:13 AM, lirockstar wrote:

    This will likely fail. Consumers don't want to carry around a tablet that has to have the phone plugged into it to work, nor do they want to answer their tablet or pull the phone out of the tablet to answer their phone if it rings while using the tablet.

    Therefore. they'll just use their phone and the tablet portion will be left home collecting dust. It's novelty, nothing more.

  • Report this Comment On December 17, 2013, at 11:43 AM, stefnagel wrote:

    Congratulations! Macaloped: Apple, of course, sells more than 50 percent of the smartphones in the U.S., meaning that Samsung’s share must be about 15 percent. So, one of those horses is Secretariat and the other one is Mr. Ed."

  • Report this Comment On December 17, 2013, at 12:02 PM, anash91 wrote:

    I want a specialized product for each thing I do, not something that can half-ass everything. I will keep my laptop and smartphone as they each have great qualities.

  • Report this Comment On December 17, 2013, at 12:50 PM, Rosterbecisco wrote:

    Cool article but missing some very pertinent data points, which were supplied by ASUS:

    1. You MUST own a Asus phone otherwise this tablet is just another paper weight on your desk. Phone dead or no phone than the pad is dead and lovely external keyboard is useless - It's the three musketeers - all for one and one for all.

    2. Camera on the rear of the phone is 10MP (cool), on the front of the phone is 2MP (not so cool) and on the Pad it is 1MP (really?) - Stop helping me! Obviously you are not taking photos with the pad.

    3. Weight of the phone 149G (nice), weight of the Pad - Unknown &/or not published - not sure which - so it must must be heavy.

    4. Internal memory on the new infinity is either 16 or 32 GB but you do get 50GB of free storage in the ASUS webstorage - This is the gift that just keeps on givin!

    5. It does claim an external 64GB micro slot, but not sure if that is on the phone or the Pad.

    And number 6 - Price (Amazon today) - $1,495

    6. Yes sir, everyone will be buying one of these toys at this price.

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