Last week marked two important milestones in the ongoing smartphone wars as Samsung released its latest powerhouse, the Galaxy S4, and BlackBerry's (NYSE:BB) Z10 finally announced the day it would make its way to U.S. shelves. These events remind us that 2013 is likely to be another critical year for the smartphone business. What follows is a brief discussion of some of the major market participants and their prospects for the year. After looking at these, it should be easier to decide who will be The Biggest Smartphone Winner of 2013.
Samsung. While the Galaxy S4 is a critical step forward, it's only a part of the story. In the past few years, the company has sold enough low-end phones to overtake Nokia (NYSE:NOK) as the largest seller of phones in the world. Furthermore, as Samsung continues to command a larger and larger percentage of the Android market -- 40% at the last report -- it is setting itself up to push Google (NASDAQ:GOOGL) in various areas. For example, the South Korean manufacturer has begun to highlight its own Samsung Hub rather than the Google Play app store; if Samsung is getting into the ecosystem, which it is clearly trying to do, it could significantly alter the landscape.
BlackBerry. After a series of delays, March 22 will finally see the BlackBerry Z10 go on sale in the United States. Various wireless carriers have already begun taking preorders for the device, and BlackBerry announced on Wednesday that one of its partners had placed an order for 1 million units. These two announcements drove the stock higher by more than 15%, but the general consensus is that unless BlackBerry can put up significant sales figures in the near term, the company will face extinction.
Apple (NASDAQ:AAPL). Since its historic high last September, Apple shares have fallen by an alarming 40%. The decline has led to a speculation as to what steps the company needs to take to regain its dominance in the smartphone space. While some analysts have pushed for a cheaper iPhone that would allow the company to become competitive in both China and India, others worry that such a move would negatively affect the company's image as the premium option. Others believe that the way forward for Apple is through the development of new markets, such as through the fruition of the various iWatch rumors.
Regardless of what direction the company chooses, it clearly must evaluate its product cycle; competitors have made the once-a-year model hard to justify, especially when intermediate updates like the 4S and the expected 5S this summer don't represent significant advances. Forrester's Charles Golvin explains: "If anything, what Apple needs to respond to is the cadence of their own releases, probably a completely new design every two years and a sort of speed bump every year is not an adequate cadence for Apple to remain at the forefront of smartphone innovation today." Picking a strategic direction is perhaps the biggest test of Tim Cook's leadership and will be illustrative of Apple's ability to bounce back.
Google. Despite the obvious pressure Samsung's increasing market share is putting on Google, the company is taking other steps to continue its dominance in the smartphone segment. The release of Google Glass later this year should mark a significant step forward. While the $1,500 price tag makes it unlikely that the product will upturn the smartphone industry, it represents a shift toward wearable technology that gives you a glimpse of where the market is going. Furthermore, IDC recently reported that 2013 would see Android overtake iOS in the tablet segment for the first time ever. This is significant, because as consumers adopt multiple devices, the user experience becomes a "stickier" one.
Nokia. Through its partnership with Microsoft (NASDAQ:MSFT), Nokia is following Samsung's lead by attacking both the premium and low-cost ends of the wireless market. The company's flagship Lumia 920 is beginning to make inroads and pick up market share, while the company just released the Lumia 520, the least expensive Windows phone to date. The company does face some challenges from Microsoft's expanded low-cost strategy, having recently partnered with Huawei Technologies to attack the African market.
Ultimately, unless Apple can quickly adapt, Google is likely to be the Biggest Smartphone Winner of 2013. The pressure the company is seeing from Samsung will put pressure on its search business, but the company's business model is expanding as mobile search becomes better defined. If, however, Apple can revamp its strategy and show itself to be a leader again, it has the potential to win. On an investment basis, the huge sell-off is a great opportunity relative to Google that is trading just below its all-time high. Apple controls its own fate, and if it embraces it, the company is poised to win this year.
Fool contributor Doug Ehrman has no position in any stocks mentioned. The Motley Fool recommends Apple and Google and owns shares of Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. 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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