Will Samsung’s Galaxy S5 Prime Beat Apple’s iPhone 6?

The rumors of the purported higher-end Galaxy S5 abound, but should Apple investors worry about Samsung's next big thing?

May 9, 2014 at 2:28PM

There have been a lot of rumors and a lot of alleged leaks about a higher-end Samsung (NASDAQOTH:SSNLF) Galaxy S5 hitting the market soon. This version, dubbed the Galaxy S5 Prime, is said to sport 3GB of RAM (up from 2GB in the current S5) and a quad-HD (2560x1440) display, up from 1920x1080 on the pain S5. It is also said to sport either a next-generation Exynos processor coupled with an Intel (NASDAQ:INTC) XMM 7260 modem or a Qualcomm (NASDAQ:QCOM) Snapdragon 805 paired presumably with the latest MDM9x35 modem from Qualcomm.

What are the odds that this model even exists?
We very recently saw news of the LG G3's 2560x1440 display hit the Web over the last week or so, and given that LG is probably going to play up this feature, Samsung is also likely to want to be able to keep up in the smartphone "resolution wars." Interestingly enough, though, the LG G3 will apparently sport a 5.5-inch 2560x1440 panel. If the rumors around Samsung's phone are correct, the S5 Prime should offer even higher pixel density at the same resolution on a 5.1-inch display.

That being said, such a phone is likely to be extremely expensive to make. Samsung already launched the Galaxy S5 (which had a larger screen than the S4, faster/likely more expensive processor, and other enhanced goodies) for about $100 less than the Galaxy S4 debuted at. This means if the company wants to preserve its margins here, it will either need to sell the purported S5 Prime for significantly more than the current S5, or the S5 Prime won't really sport these BoM-cost-ballooning features.

Should Apple worry?
The big question then is whether Apple (NASDAQ:AAPL) -- which has been on an absolute roll with its iPhone products lately -- has anything to be worried about vis-a-vis an even higher end, premium-tier Galaxy S5. While Samsung would handily win the "spec wars" with three times the RAM and a much sharper display, it's important to note that Apple's key differentiation point isn't necessarily the hardware, but the harmony of the hardware and the software.

Iphone Small

Apple's wildly popular iPhone 5s has still got it. Source: Apple

For customers who prefer the ease of use of iOS, there is simply no alternative to Apple, and mainstream customers who are "used to" iOS have a rich library of iOS apps and are also probably hooked into iTunes won't switch to a Samsung/Android phone. It is this differentiation via software (which is R&D intensive but very COGS-friendly) that helps Apple not only maintain its share of the high end, but also allows it to do so with fantastic profitability.

Foolish bottom line
Samsung, LG, and the hordes of Android vendors can bring in the flashiest displays and biggest "on-paper" specifications, but for many users, iOS and the ecosystem that surround it are what make Apple's phones worth the premium, not necessarily the hardware. Any company can buy an obscenely expensive, high-resolution panel and put a ton of RAM in its phones, but not any company can build the ecosystem, the brand, and the customer loyalty that Apple has. 

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Ashraf Eassa owns shares of Intel. The Motley Fool recommends Apple and Intel. The Motley Fool owns shares of Apple, Intel, 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.

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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