Apple's Inc.'s Older iPhone 5s Is Beating Samsung's New Galaxy S5

The first major sign Samsung may be significantly underperforming near-term expectations came when it offered pre-earnings guidance earlier this month to warn investors of a massive 24% decline in operating profits. The company cited currency challenges, headwinds in its smartphone sales, and cannibalization of its smaller tablets by phablet smartphones. But the story just keeps getting worse. Apple's (NASDAQ: AAPL  ) eight-month-old iPhone 5s is still apparently outselling Samsung's flagship phone, even though the latest S5 model was just released, according to a new report from Counterpoint.

iPhone 5s. Image source: Apple.

Is Samsung losing ground?
The iPhone 5s continued to be the world's best-selling smartphone in May, based on a channel survey across 35 countries. This goes against what many analysts had predicted, Counterpoint notes. Even worse for Samsung, the race wasn't even close.

"The highly anticipated Galaxy S5 comes in at second place but still a quite distant number two in terms of (sell through) unit sales," said Counterpoint analyst Tom Kang.

Not only is Samsung's premium smartphone business suffering, but total smartphone shipments for the company actually declined, year over year, in its second quarter.

Apple may have something to do with Samsung's poor results
Apple's top spot on the list of best-selling smartphones in May comes ahead of the tech-giant's third fiscal quarter earnings report. Analysts expect Apple to report 35 million iPhone sales, a third-quarter record and up 12% from the year-ago quarter.

Going forward, Apple will likely test Samsung even more. Today, Samsung benefits from Apple's absence in the category of smartphones with display sizes larger than four inches. But a stream of part leaks and supply chain reports strongly suggests Apple is planning to launch an iPhone 6 that is available in both 4.7-inch and phablet-like 5.5-inch display sizes.

Samsung Galaxy S5. The latest-generation Galaxy smartphone has a display that measures 5.1-inches. Image source: Samsung.

Even more, Counterpoint's research supports the idea that phablets are popular with consumers. Forty percent of smartphones sold globally in May were phablets, Counterpoint's channel survey shows.

"If Apple comes out with a phablet later this year it will instantly become a hit and top the list of phablets within two months of availability," said Kang.

A growing number of analysts expect that the demonstrated demand for larger smartphones at other manufacturers signals robust demand for Apple's next-generation lineup of iPhones.

Given that the market for smartphones with larger displays is already proven to be hot with consumers, Apple investors are in a fortunate position that offers a favorable risk/reward profile at these levels. Samsung, on the other hand, is in a tough position. After riding the success of phablets in Apple's absence, demand for the South Korean-based company's smartphones appears to have peaked, even as Apple continues to grow sales on a year-over-year basis with its 4-inch iPhone 5s.

This small company may win big on Apple's next big product launch
Apple's so-called iWatch will almost undoubtedly shake up an entire industry. But one small company may benefit from the likely enormous adoption of these smart wearable devices more than Apple. Even better, its small stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, just click here!

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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 July 14, 2014, at 11:57 PM, Oldfool103 wrote:

    Oh, Droidsters, shouldn't you be lining up to tell us how unsophisticated we are? Last year's Apple tech answering more needs than the brand new S5. How foolish we must be...

  • Report this Comment On July 15, 2014, at 6:05 PM, shamurs wrote:

    I don't quite see how this is relevant, the 5s is clearly Apple's flagship currently and since they are released on different sides of the year, the 5s has had much longer to accumulate purchases. This website is clearly a haven for Apple fans.

  • Report this Comment On July 15, 2014, at 10:08 PM, never2dull4u wrote:

    Game Set Match for Apple.

    Samsung/Android does not have the 64bit AND TouchID.

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Daniel Sparks

Daniel is a senior technology specialist at The Motley Fool. To get the inside scoop on his coverage of technology companies, follow him on Twitter.

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