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Is Samsung Trying to Steal Apple’s Thunder?

By Ashraf Eassa – Feb 6, 2014 at 11:00AM

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A lot of curiously timed leaks about Samsung's Galaxy S5 seem to be designed to steal Apple's thunder.

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 (AAPL -0.34%) 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.

Ashraf Eassa has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. 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.

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