Samsung Still Hasn't Revealed This Crucial Fact About the Galaxy S5

Google's hardware partner Samsung still hasn't revealed this crucial fact about its upcoming flagship. It could give it the edge over Apple's iPhone.

Feb 28, 2014 at 12:30PM

Google's (NASDAQ:GOOGL) biggest hardware partner, Samsung (NASDAQOTH:SSNLF), unveiled its latest flagship smartphone, the Galaxy S5, earlier this week. While the intricacies of the handset's hardware and software have mostly been revealed, there's still one major detail that hasn't been finalized: the price.

Samsung's prior Galaxy flagships have been just as expensive as Apple's (NASDAQ:AAPL) iPhones, but if recent reports are true, Samsung could be about to make a drastic change.

A more affordable flagship?
Samsung still hasn't announced an official retail price for its forthcoming phone, which has led to widespread speculation. Various reports (via BGR) have suggested that the Galaxy S5 could retail for as little as $399 off contract. Vendors, however, including, have begun to list the phone for preorder at prices consistent with Samsung's prior models.

Ahead of its unveiling, the Samsung rumor mill, fueled by reports from fairly reputable publications, had set lofty expectations for the Galaxy S5. Samsung's flagship was supposed to raise the bar, with major new features including a metal casing and an ultra high-definition screen.

None of that happened, of course, leading me declare the phone a major disappointment. However, if Samsung does offer the phone at a sharply reduced price, it would change things quite drastically.

Pricing pressure on the iPhone heats up
Around $400, Samsung's Galaxy S5 would be price-competitive with the growing number of cheaper Android flagships. Google's own Nexus 5 (manufactured by LG) retails for just $349 off contract, while Motorola's Moto X can be purchased for $399.

This trend toward cheaper smartphones is somewhat of a concern for Apple, as low-cost, "good enough" competitors could eventually rob Apple of its customer base.

In some developed markets like the U.S. and Japan, it isn't an immediate threat, as consumers continue to rely on carrier subsidies to purchase their smartphones -- most never see the full retail price anyway. Admittedly, this could change, as carriers have begun to push subsidy-free plans. But for now, less than 30% of the smartphones purchased at the four major U.S. carriers are done so with subsidy-free plans, according Consumer Intelligence Research Partners

More broadly, on a global basis, few consumers have access to subsidies, which is why Google's Android has about 80% of the market. In a place like China, for example, where smartphone subsidies are relatively paltry or nonexistent, a cheaper Galaxy S5 could give Samsung the edge over Apple.

Waiting for pricing confirmation
Until Samsung confirms the Galaxy S5's retail price, it remains speculation. But based purely on the phone's features, the Galaxy S5 is far from a noteworthy release, and could give consumers a reason to consider phones from Google's other hardware partners.

But if Samsung decides to compete on price, and offers up this year's flagship at a sharply reduced price point, it would shake things up quite a bit. While most American consumers, still reaping the benefits of subsidies, would hardly care, it would continue to further the trend of less expensive, Android-powered flagships.

That could make things more difficult for Apple as it looks to expand the iPhone business worldwide.

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Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple and Google. 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.

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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.

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