Is Samsung Trying to Steal Apple’s Thunder?

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The rumor mill is rife with speculation about Samsung's (NASDAQOTH: SSNLF  ) upcoming Galaxy S5. Interestingly enough, the South Korean giant's Galaxy S4 sales seem to be far less robust than expected, so it seems only natural that the company -- whose high-end handset sales are likely suffering at the hands of Apple's (NASDAQ: AAPL  ) highly successful iPhone 5s -- would go out of its way to hype up its next-generation phone to boost sales.

Beware the rumor mill
Some sources are claiming that Samsung's next phone will feature a fingerprint scanner, a 2560-by-1440 display, and may even cook your breakfast for you. But seriously, many of the rumor sites are claiming some pretty fantastic things for this phone. It's important to understand that no matter how credible a rumor sounds, there's just a lot of noise out there.

For example, prior to the launch of the Galaxy Note III, the rumor mill ran rampant with claims that this "phablet" would contain a fingerprint sensor. Yes, "sources deep inside Samsung's India R&D" claimed that this was the case. Of course, when the rumor didn't pan out as expected, the rumor mill claimed that the feature was pulled at the last minute and that an updated version of the Note 3 would sport such a scanner. Well, we know how that turned out.

Some issues with "everything but the kitchen sink"
While Samsung does have a tendency to pack its phones with eye-popping specifications, at the end of the day, every decision has trade-offs. If the S5 packs a 2560-by-1440 screen, the cost to build it will go up. Yielding display panels of that pixel density is likely to be difficult. A higher-resolution display also consumes more power, so managing the battery life will be more difficult.

Don't forget that the mobile system-on-chip, or SoC, needs to consume more power to drive such a high-resolution display. 3-D games, for example, often won't run at native resolution, as modern mobile chips likely don't have the performance to drive such high-resolution displays in complex scenes. There is method to Apple's madness of sticking to an 1136-by-640, 4-inch display. It is not simply being stubborn.

The high end isn't even where the growth is
Samsung clearly cares about its high-end "halo devices" as these help build the brand. But at the end of the day, Samsung and the rest of the industry realizes that the growth is likely to be at the low end and mid-range of the device spectrum. No matter how dense the pixels are on the screen and no matter how fast the mobile processor is, Samsung is trying to fight Apple's brand equity and consumer loyalty -- a likely losing proposition longer-term, as many PC vendors realized in trying to ape the MacBook Air/Pro. The large iPhone(s) coming later this year will likely further solidify this point and gain share.

While Samsung will keep trying to fight Apple at the high end, it should be careful to not lose sight of the low end, where Lenovo/Motorola, ZTE, LG, and a host of other vendors will be gunning to take Samsung's share. Samsung and Apple are locking up obscene amounts of duopoly profits. Given the fairly low barrier to entry into smartphones, it's only natural that others will try to fight for a piece of that pie.

The Foolish bottom line
Yes, it really does look like Samsung is trying to take sales from Apple's iPhone 5s by leaking details and pulling in the launch of its Galaxy S5, and it is likely that the S5 will drive another spike in sales at the high end. If Apple is smart, it will not wait until September to launch a next-generation iPhone to counter the Samsung threat. Only time will tell how this all pans out.

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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 February 06, 2014, at 12:06 PM, bobbydig wrote:

    Another copycat attempt by Samsung. The 4s failed, I see Samsung next device doing much of the same. Samsung has over saturated Android with too many phones making it impossible for anyone model to shine or make money. The same thing happened in the Microsoft world, too many look a like device confusing the average user.

  • Report this Comment On February 06, 2014, at 12:32 PM, marv08 wrote:

    Without a 64-bit version of Android (not there yet), respective SoCs and the resultant energy savings (even devices with less than 4 GB RAM benefit greatly from the far more efficient instruction set of these chips)... Samsung will have higher clock speeds as the only mean to tackle the 5s's performance. Adding higher clock speeds, more resolution, subsequently even more RAM dedicated as VRAM... We talk about a lot of wasted energy here.

    Short of having an own OS, there will also be limits to what they can actually do with a fingerprint sensor. It also remains to be seen, how good it will be. Apple did buy a company with tons of experience in this field and already buys all of the sapphire glass it can get. Samsung will thus either have to move the sensor out of the home button (big usability decrease), or cover such a button with materials that might not stand the test of time. Another very important question is the storage of the sensor data or hash. Apple uses a custom SoC with a dedicated area for storage of this data. No application and no API has any access to it. Samsung still ships most devices with standard chips, so, what will their solution be? To quote that guy from the Marathon Man... "Is it safe?"

    Another important point is Samsung's recent agreement with Google to ship a more stock Android. This has benefits (some of Samsung's extensions and tools were less than ideal), but it also gives them less means for differentiation. Assuming (if rumors are close) the S5 in a metal version will cost as much or more than the 5s while offering little differentiation from other Android devices... The ones stealing Samsung's thunder here could be HTC, Sony, Lenovo, Huawei, ZTE et al while the effect on Apple should be nil, even if Apple does not roll out an iPhone 6 before September.

  • Report this Comment On February 06, 2014, at 2:22 PM, GaryDMN wrote:

    Samsung is a company that built a product based on a rumor that Apple was going to do an iWatch. The product an Android watch flopped. I think that is appropriate and shows why the tech industry spend an incredible amount of time trying to figure out what Apple will do next, so they can copy it.

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Ashraf Eassa

Ashraf Eassa is a technology specialist with The Motley Fool. He writes mostly about technology stocks, but is especially interested in anything related to chips -- the semiconductor kind, that is. Follow him on Twitter:

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