Samsung Milks the Galaxy S4 Further

Just months from the next-generation Galaxy S5 launch, Samsung prepares a new iteration of its Galaxy S4 to help struggling device sales.

Feb 3, 2014 at 11:30AM

Samsung (NASDAQOTH:SSNLF) is by no means in a position of weakness in the smartphone space. Sure, its high-end smartphone sales aren't as robust as the company had expected, but the company still generates a very significant amount of operating profit from the smartphone market -- capturing a piece of the profit pie second only to Apple's (NASDAQ:AAPL). What's interesting, however, is how Samsung continues to milk its prior-generation Galaxy S4 just ahead of the S5 launch.

It's the Galaxy S4...with faux leather
The company's latest variation of the Galaxy S4 is called the "Black Edition," in which the backs are covered in faux leather, something very close to what it outfits its higher-end Galaxy Note lineup with. While this addition to the Galaxy S family isn't particularly revolutionary, it does give consumers yet more choice. Part of Samsung's immense success in the handset market has been that it has had absolutely no problem pumping out variation after variation to see what eventually sticks.

On the whole, this is a nice addition to the Galaxy S family, although the timing is rather strange, given that the company is set to launch its next-generation Galaxy S5 at some point over the next few months. Does the company hope that this will meaningfully revive sales as a high-end/premium device, or is this simply broadening the S4 lineup so that the S4 becomes the second-tier phone that can effectively capture more of that mid-range share?

The Galaxy S5 is the one to watch
The Galaxy S4 Black Edition is unlikely to move the needle as a high-end device. The high-end smartphone market is seeing growth slow rather substantially, and it seems likely that Apple could continue to make inroads against Samsung's current lineup. That being said, while this model is unlikely to move the needle, the Galaxy S5 will be the one to watch.

Indeed, the next Galaxy S phone should include a fingerprint reader -- which Apple's Tim Cook said "intrigued" customers and drove a richer product mix -- as well as a 2K display, a lightning-fast Qualcomm (NASDAQ:QCOM) Snapdragon 800, and likely a brand new software interface and industrial design. While this by no means guarantees that it will succeed in reclaiming lost share to Apple, it will probably have a solid window of opportunity until the larger iPhone enters the picture.

Foolish bottom line
While the Galaxy S4 Black Edition may excite some Samsung investors, it is unlikely to be significant. The real device launch from Samsung to watch is the next-generation Galaxy S5. It should be a solid phone, particularly if Samsung significantly improves TouchWiz -- and the new UI on the new Galaxy Tab Pro tablets is encouraging. That would be a win all around that is sure to cause headaches for all other high-end Android smartphone players, and perhaps Apple, too. 

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Ashraf Eassa has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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