Will Samsung’s Metal Galaxy S5 Hurt Apple?

Ahead of its rumored March/April launch, leaks detailing Samsung's (NASDAQOTH: SSNLF  ) Galaxy S5 have begun to surface. While the next generation phones are slated to include the customary improvements (faster processor, higher resolution screen, etc.), there is one big "change" that could potentially have Apple (NASDAQ: AAPL  ) investors worried. Samsung is apparently going to do a "premium" version of the S5 with a metal chassis.

Could this be a big deal?
It's very tough to predict what drives consumer buying habits, particularly in high-growth, highly volatile industries. One of the main complaints that Apple aficionados tend to levy against Samsung's phones is that Samsung's are made from "cheap plastic," while the premium version of the iPhone sports an aluminum chassis. This certainly goes a long way to giving a more "premium" feel than the plastic that the Galaxy S line is made from.

It's interesting to note that Apple isn't the only company that builds premium metal phones. For example, HTC's One lineup has been lauded for its superb industrial design. However, the nice design hasn't saved HTC from the financial hardships that it faces today. Samsung's "cheap plastic" phones still outsell HTC's by a huge margin. So, what's really going on here?

It's all about marketing
At the end of the day, Apple and Samsung dominate the smartphone market primarily due to their vast marketing resources. Are there Android phones that have been better reviewed than the Galaxy S4? Of course! They don't sell anywhere nearly as well, though, precisely due to the fact that customers know Samsung's slogans, its product lineup, and its brand. Very few know what an "HTC" is.

Apple, interestingly enough, sells far fewer smartphone units than Samsung does, but its share of the high end in which it plays exclusively seems to be rather high. While part of this really is the brand equity, another big part of it is simply the ecosystem/user experience. Google's "Play" store and app ecosystem continues to grow by the minute, but Apple's iOS and surrounding ecosystem just seems to resonate more with buyers willing to shell out the big bucks.

So, about that metal Galaxy
The odds are good that even if Samsung releases a metal Galaxy S5, Samsung will likely charge an obscene premium for that model. It'll probably be a limited run, it'll be more expensive to make (amplified by the fact that it is limited run), and – frankly – it could simply serve to remind customers that Samsung is making an attempt to mimic Apple. Further, with Apple possibly launching its "larger" iPhone in the near future, Samsung loses a key product edge.

See, it's very unlikely that there is a customer base out there that will forgo a Samsung Galaxy S4 or a Galaxy Note 3 because it's not made of metal. Conversely, there may be a rather sizable number of smartphone customers whom have wanted a larger screen phone and went with a Samsung because no Apple alternative was available. The net "flow" of customers from Samsung releasing a metal Galaxy S and Apple releasing larger iPhone is very likely toward Apple.

Foolish bottom line
This year could be very exciting for the smartphone wars, indeed. While Apple had a rough 2013 (and while Samsung continued to bust out record profits for most of last year), the tides could finally turn. With Apple likely planning an all-out assault with many screen sizes and, perhaps, entirely new product categories, the company – and the stock – could do very well. Samsung, on the other hand, could lose its grip on the high end of the smartphone market. The low end is safe, though – for now. 

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Read/Post Comments (22) | Recommend This Article (13)

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 January 18, 2014, at 2:15 PM, dwk77 wrote:

    I have a Galaxy S4 inside an Otterbox Commuter case. What difference does it make whether the phone is plastic or metal? My wife has the Apple 5s. It feels like a brick in your hand. I would rather have a super thin, lightweight but stiff plastic case than a heavy metal case. What's more important is that Samsung phones have Gorilla Glass which does more for durability than a metal case. Bottom line: people are going to choose operating system, screen size and ecosystem applications over a plastic or metal case. I'm happy with the Galaxy but could have been happy with a Droid or Nexxus too. Apple's tiny screen is a joke and the short battery life is not funny.

  • Report this Comment On January 18, 2014, at 2:24 PM, TTES wrote:

    Samsung's possibly coming out with a metal-cased phone will not make me replace my iPhone for it. And it really has little to do with the phone.

    I, like a lot of iPhone users, are quite invested (some would say tied or imprisoned) to Apple's ecosystem. I like getting all my stuff from any of my iDevices. I like the general quality of the devices and how easy they are to use.

    I also like not wondering if my phone will be upgradable to the latest OS upgrade, a problem that plagues (IMHO) way too many Android device users.

    If you don't like Apple, fine. I don't hate Android. It's just that Apple works best for me needs, and a metal Samsung really isn't enough to get me thinking about converting to Android.

  • Report this Comment On January 18, 2014, at 3:39 PM, Batman007 wrote:

    Good idea! A galaxy N (N>=5) made of lead to present to Ashraf so he stops writing nonesense about Apple.

  • Report this Comment On January 18, 2014, at 3:50 PM, gsagi wrote:

    I see Apple doubling over and gasping when the new metal Samsung hits the...

    market.

  • Report this Comment On January 18, 2014, at 4:02 PM, zippero wrote:

    Like all the other Android phones, Samsung's phones are all using older 32-bit technology vs. 64-bit for Apple. A metal case and 560 ppi screen will never change this fundamental technological inferiority on Samsung's part. Whatever gimmicks like metal case that Samsung wants to add to the S5 now, the Chinese will ape that move in a nanosecond at less than half the price, so Samsung has basically lost its "high-end" market position forever. It's just a has-been Korean company now. The Korean media urges the whole Korean nation to wean itself off its dangerous dependence on one company, Samsung, for 25% of its GDP. It reminds Koreans everywhere to remember what happened to Finland after Nokia failed.

  • Report this Comment On January 18, 2014, at 4:37 PM, dwilh51183 wrote:

    SAMSUNG PHONES HAVE A HORRIBLE RESALE VALUE...MAYBE BECAUSE AFTER YOU USE ONE FOR ANY LENGTH OF TIME YOU WANT TO THROW IT ON A BRIDGE AND HAVE A SEMI TRUCK SMASH IT. LOST CALLS ,SKIPPING VOICES, LATE PHONE MESSAGES , STOLEN TECHNOLOGY...ITS BASICALLY A POOR PERSON'S PHONE! NO THANKS. ONLY GET 1 LIFE TO LIVE AND I WANT AN AMERICAN CLASSIC QUALITY PHONE. GO AAPL

  • Report this Comment On January 18, 2014, at 5:17 PM, dwilh51183 wrote:

    BIGGER SCREEN QUALITY IPHONE 6 COMING OUT IN A FEW MONTHS ALSO, BUT THIS PHONE CAN BE SOLD AFTER USING FOR 2 YEARS FOR $400.00-$600.00! CAN'T DO THAT WITH A SAMCLONE

  • Report this Comment On January 18, 2014, at 5:20 PM, GaryDMN wrote:

    Samsung's problem isn't plastic, its Android, the commodity open source OS. There is little doubt that Apple is not Samsung's problem and that other manufactures of Android phones will continue to drop prices. This is hurting Samsung and Google, but we have only seen the tip of the iceberg. There is no software barrier of entry, as any low cost Chinese manufacturer can release an Android phone. The Android market will be a bloodbath for players with high overhead and big advertising costs.

  • Report this Comment On January 18, 2014, at 5:23 PM, dwilh51183 wrote:

    ALL PURCHASES OF SAMSUNG PHONES,TV'S AND WHATEVER ELSE THEY MAKE...REFRIG'S STOVES,ETC ....40% OF THE MONEY GOES TO THEIR GOV'T, WHO THEN FUNDS THEIR MILITARY IN THEIR ATTEMPTS TO MAKE A NUCLEAR WEAPON TO DROP ON THE U.S.A. SO WHEN THAT HAPPENS , ALL YOU PEOPLE WHO HAVE CHILDREN CAN BE PREPARED FOR THE PHONE CALL FROM OUR U.S.A.MILITARY YANKING YOUR KIDS OFF TO WORLD WAR 3 .AND SOME OF THEM WILL COME HOME TO YOU SAMSUNG LOVERS.....IN BODY BAGS! KOREAN'S HATE AMERICAN'S YET YOU SUPPORT THEM AND BUY THEIR TRASHY PRODUCTS

  • Report this Comment On January 18, 2014, at 5:45 PM, emiliosic wrote:

    Some fool walks into a store looking for a 5S and walks out with an S5...

    The naming, although through fortuitous coincidence; seems ridiculous compared to the competition.

  • Report this Comment On January 18, 2014, at 6:19 PM, Kisorchand wrote:

    First of all, I like Samsung Galaxy Note 3 and I would be more happier if Galaxy Note reaches 6.4 inches screen with UHD quality. It doesn't matter whether metal or present Faux leather but it should be of high end configuration. Apple will remain as underdog as long as it doesn't increase its screen size along with UHD type screen quality plus high end configuration like Samsung hardware. Apple cannot boast of anything when it is of only 1GB RAM and 1.5 GHZ even though so called 64 Bit processing Chip.People who are after iphone are of only craze and showy by nature. I hope people should be more realistic not on the basis of hollow American show.

  • Report this Comment On January 18, 2014, at 6:24 PM, Kisorchand wrote:

    Anyway we like Samsung and would support Samsung. Those who wants iphone , will be reduced to minority as I wish and in reality, it already happened because we the people of the whole world except American crazy people, would support Samsung and we will spend for it.

  • Report this Comment On January 18, 2014, at 6:33 PM, Kisorchand wrote:

    we the people of th world minus American people, would support Samsung because it listens to us and it delivers what we need with bigger HD screen and high end configurations whereas Apple always hype its iphone with so little petty screen and 1GB RAM. its quite funny. There is huge difference when we use side by side for long periods of any activities in them in real world.

    So, unlike biased American people, we would continue support to Samsung Galaxy phones because we have a trust in it. we are notr for show and craze like iphone users

  • Report this Comment On January 18, 2014, at 6:36 PM, brainwave wrote:

    After using and iPhone, HTC, and looking over at Samsung, Samsung has the best phone. I had an iPhone for a month and returned it. The Samsung phone has superior specs all around and the iPhone is just hype. I used it for a month but it didn't have the apps I wanted, not the best software, and small screen size. After I returned it I asked the guy why the iPhones were so popular and he said to me honestly, they have effective marketing. They brainwashed everybody into thinking it is the best without looking at the features. So, make a list of what is most important for you in a smart phone then go to the store and buy it. I had an android phone before and only went for the iPhone because everyone talked about how great it is but it wasn't for me. If having an iPhone makes you feel better, more power to you. But compare all the features/specs then make your selection.

  • Report this Comment On January 18, 2014, at 8:32 PM, JohanStrauss wrote:

    "so Motley will get far less clicks than they get on their Apple bashing headlines"

    Oh, waaa. Fanboi got butthurt.

  • Report this Comment On January 18, 2014, at 9:09 PM, zippero wrote:

    Unfortunately, the Korean media laments that the Galaxy S4 is selling only 3 million a month now (vs. expectations of 7 million a month). A metal case on the Galaxy S5 will not save this sinking ship named Samsung nor the country called S. Korea which stupidly depends on a single company for 25% of its exports. No wonder the Koreans are all cursing China these days for taking over all its major industries from smartphones to ships to steel and even automobiles. When a whole nation looks to the Galaxy S5 to save itself from economic and national peril, you know it's not going to end well.

  • Report this Comment On January 18, 2014, at 9:27 PM, OSXX wrote:

    Even if they come out with a Titanium version it will still be the same phone, what makes the I phone so much better is the OS. not the hardware. Look at the HTC One, a really nice piece of hardware and great screen has a better response time the any galaxy phone but the OS sucks. Also Samsung just floods the market with cheep phones that it looses it value and its catered to people who can't afford a iPhone. The Galaxy is a KIA compared to a BMW.

  • Report this Comment On January 19, 2014, at 12:51 AM, alphashort wrote:

    Just love the Samsung troll that says the iphone doesn't have the apps he wants. I wonder if he realizes that virtually EVERY app developer develops their apps for iOS BEFORE Android. IF they are successful on iOS, only then do they write them for the infinitely more complicated, cumbersome and much less lucrative Android OS.

  • Report this Comment On January 19, 2014, at 12:54 AM, JaredPorter wrote:

    "Samsung, on the other hand, could lose its grip on the high end of the smartphone market. The low end is safe, though – for now."

    Actually there was a turning point, a mind-share shift and financial shift in Samsung's fortunes. The event that marked that turning point was the "flop" of the Broadway Extravaganza rollout presentation of the Samsung Galaxy S4, a product which was reviewed as being gimmicky. The expectations had been so lofty, but the S4 did not sell as well as the S3, and had to be deeply discounted during Christmas. By contrast, the iPhone 5s has been a hit with Apple increasing its comparable sales results because the market responded to the growing eco system, 64-bit camera features and fingerprint security. Also, Samsung is in critical danger of losing sales at the low end due to all the players (especially Chinese and Indian companies) operating in that sphere. That's why Samsung's CEO had an emergency meeting with all hands on deck in November.

  • Report this Comment On January 19, 2014, at 4:07 AM, garryWein822 wrote:

    Good article. Very objectively done.

    Most of Motley Food's articles are piece of trash . Either they take position in the stock and try to promote it or to make fun of competitors. What a joke. But finaly this one is very even and objective.

  • Report this Comment On January 19, 2014, at 11:31 AM, steekyjim wrote:

    "so Motley will get far less clicks than they get on their Apple bashing headlines."

    Will your blog be on the front page of Yahoo? Where are you going to get your clicks from? Many users are already tied into Yahoo because once upon a time they had a good email, geocities and IM service. For your website to be successful there needs to be a reason for them to keep coming back.

    "virtually EVERY app developer develops their apps for iOS BEFORE Android"

    App developer here. This is not exactly true. To develop for iphone you pretty much need to have a Mac computer. Android apps on the other hand can be written and 'compiled' using Eclipse which is available for the Windows, Mac or Linux platforms. This fact alone means that more developers will be writing apps for Android. With little investment you can make a good app.

    Apple users do pay more for apps, but there are far more Android users around the world and that number is still growing fast. If you do the math will see that a developer can make just as money with an Android app as an Apple one.

    32 bit vs 64 bit?

    The Atari Jaguar game console released in 1993 was 64 bit. It was a flop. The number of bits used in processing does not guarantee the quality of the software. App developers for phones usually target Iphone 3 and above or Android 2.2 and above, so that they can sell their apps to more people. Most apps on mobile devices don't require 64 bit processing. That's why an app on a Samsung device will run just as fast as on an Apple device. I challenge anymore here to name one app for either device that will require 64-bit processing to run smoothly.

    Will the metal case help Samsung? Yes, because it removes one of the key arguments made by Apple fanboys, that they are made of "cheap plastic". Personally I have been using mobile phones since 1998 and have never had a problem with the plastic. One phone I had did have a cracked screen. So to me plastic or metal doesn't make a difference. The main thing for me is that the phone works and that the applications I use run well.

  • Report this Comment On January 19, 2014, at 1:26 PM, ocstef wrote:

    I think anything Sammy has done has hurt Apple already. It doesn't matter if they come out with 3 new phones, a watch and a hologram keyboard accessory. Apple is sucking left and right as it is.

    This new metal phone will be hot but I seriously hope they fix the interface. Sucks right now. So lame. At least with Apple they know how to design cool looking interfaces.

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