How Does Samsung Feel About a Large iPhone?

So, just how does Samsung feel about the "big" iPhone slated for this year?

Feb 5, 2014 at 11:30AM

On Samsung's (NASDAQOTH:SSNLF) most recent earnings call, an analyst pressed Samsung's management about what it thought about the potential impact of a large-screen iPhone from Apple (NASDAQ:AAPL) on Samsung's high end business. While, of course, Samsung wasn't going to say too much, the response that Samsung's management did give was pretty interesting.

Samsung believes that it "owns" the category
Samsung's management opened with an initial comment claiming that it doesn't like to comment on specific competitors. This makes sense, particularly as Samsung is still likely vying for Apple's A-series chip manufacturing business and it is very likely that Apple is a major display customer. That said, the company did have the following to say:

If you look at the shipment of the Note products which most recently launched (inaudible) Note 3, each new generation has greatly outsold the previous generation and I believe this reflects the market awareness that large smartphones equals Samsung.

This is certainly true, and it is likely that with Samsung's brand awareness/marketing might, Apple will need to fight hard to gain share. That being said, while Samsung has found itself going up against the likes of LG and HTC in the "large" smartphone space today, none of these competitors has the brand loyalty/clout that Apple has. Indeed, there is very likely some serious pent up demand for "large" iPhones that could prove to be a headwind to future Galaxy Note/S sales growth (especially as the high end slows down).

Differentiating with displays
The Samsung executive continued with the following:

Our strategy therefore is to offer more differentiated displays within the large display smartphone market and also have differentiating user experiences such as the S-Pen and multi window function in order to further strengthen our leadership in the large face smartphone space.

Samsung's in-house display panel design and manufacture is certainly a major plus when it comes to trying to differentiate and in terms of having a good cost structure as a "supplier" to the smartphone/tablet products. While Apple really pushed the "retina display" idea, Samsung has really taken it and run with it. To put this in perspective, Samsung's Galaxy S4 sports a 1920x1080 display in a 5-inch package and the S5 is rumored to be a 5.24-inch display with a whopping 2560x1440 resolution – absolutely crazy!

That said, the Apple iPhone 5s, even with its meager 1136x640 resolution 4-inch display seems to be selling like hotcakes, much to the chagrin of Samsung. Perhaps there's more to the equation than simply "display specs" (although Apple really needs to innovate here as it does sell the "luxury" product).

Foolish take
Will Samsung gain back share with the S5 and the likely Note 4 at the end of the year? It'll be tough in the face of the purported Apple competition which should never be underestimated. That being said, Samsung does seem to at least be following its core corporate strategy and one that has been great to the firm during this smartphone boom: build a ton of variants and cater to the broad market while at the same time trying to capitalize on the much more profitable high end.

Only time will tell if Samsung's high end ultimately has staying power in the face of a more aggressive set of Apple launches, but whatever the outcome, 2014 should be a very interesting year for all investors and industry observers.

The next step for you
Want to figure out how to profit on business analysis like this? The key is to learn how to turn business insights into portfolio gold by taking your first steps as an investor. Those who wait on the sidelines are missing out on huge gains and putting their financial futures in jeopardy. In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal finance experts show you what you need to get started, and even give you access to some stocks to buy first. Click here to get your copy today -- it's absolutely free.

Ashraf Eassa has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information