Why Samsung's Galaxy S6 Won't Dent Apple's iPhone 6 Sales

Samsung (NASDAQOTH: SSNLF) -- which recently forecast its fifth consecutive quarterly operating profit decline -- desperately needs a hit smartphone to revive its slumping mobile business, which accounted for over half of its top line last quarter.

That's why all eyes are on Samsung's upcoming launch of its flagship Galaxy S6. Samsung hasn't confirmed any details regarding the S6, but most analysts expect the device to be unveiled in March to coincide with MWC (Mobile World Congress) 2015.

Samsung's dire situation
According to IDC, Samsung's global smartphone market share slid from 32.2% to 23.7% between the third quarters of 2013 and 2014. During that time frame, Apple's (AAPL 1.27%) market share dipped slightly from 12.8% to 11.7%.

Like its Android rivals Sony (SONY 1.10%) and HTC, Samsung is being squeezed out of the high-end market by Apple as it loses the low and mid-range markets to cheap Chinese competitors like Xiaomi.

To compensate, Samsung unveiled scatter-gun products like smartwatches, VR headsets, and curved smartphones. It filled every possible niche of the mobile market with a flood of low-end to high-end models. Unfortunately, none of those strategies prevented Samsung's bottom line from declining.

Will Samsung learn from the S5's failure?
Samsung's previous flagship phone, the Galaxy S5, was considered a major flop. Last June, Apple's older iPhone 5s outsold the S5 during its first full month of sales. As of last November, Samsung only sold 12 million S5s -- a year-over-year decline of 4 million units compared to launch sales of the S4.

Samsung's previous flagship phone, the Galaxy S5. Source: Samsung

The S5 didn't impress consumers because its hardware improvements were seen as incremental, and its plastic frame felt cheap to many reviewers. Samsung also unwittingly cannibalized the S5 with the more popular Galaxy Note 4, which hit the market last October. Meanwhile, Chinese companies like Xiaomi, Huawei, Lenovo, and OnePlus flooded the market with comparable Android devices at lower price points.

The S6's rumored specs, according to SamMobile, include a 64-bit octa-core processor, 3GB of RAM, a 5.5-inch 1,440 x 2,560 screen, a 20-megapixel rear camera, and a 5-megapixel front camera. Those beefy specs easily crush the iPhone 6 and 6 Plus' comparatively paltry specs.

Why specs don't matter to average consumers
However, the problem is that Samsung already topped Apple in terms of hardware over the past few years. If we compare the hardware in the S5 and Note 4 to the iPhone 6 and 6 Plus, we can assume that the average Apple customer doesn't care about cross-platform hardware comparisons.

Sources: Industry and company websites

Apple's strategy is simpler than Samsung's. It launches just two new phones per year, maintains a closed OS, and enhances its comparatively weaker hardware with a more polished software experience.

This preserves the iPhone's premium brand appeal among less tech savvy consumers, keeps margins healthy, and separates iPhones from the saturated market of Android devices. By comparison, Samsung must equip its high-end phones with more expensive components than the iPhone, but must sell them at lower prices fend off cheaper Android rivals.

That strategy might work if unit sales were climbing, but it's failing since Samsung's handset sales are declining. If the rumored specs are be believed, the S6 will merely represent a marginal improvement over the S5. Not only would the S6 once again fail to compete against the older iPhone 6, but it could cannibalize sales of the Note 4.

Samsung's Galaxy Note 4. Source: Samsung

What Samsung should do
I doubt that the S6 will fare much better than the S5, but there are several other ways for Samsung to repair its ailing smartphone business.

A popular idea is for Samsung to declare independence from Google (GOOG 0.74%) (GOOGL 0.55%) by installing Tizen, its own OS, across its flagship phones. This plan, which is currently crippled by the lack of Tizen apps, could help Samsung break away from the Android market and instantly give it the third largest mobile OS in the world. Another idea is for Samsung to launch more unique devices, like the Galaxy Note Edge, which will help its devices stand out in a sea of similar-looking smartphones.

Lastly, Samsung must tighten up its smartphone business by reducing the number of available devices, since low-end devices cheapen its brand appeal while variants confuse consumers. Samsung's S6 -- which might offer comparable specs to the Note 4 -- is a key example of a device which should either be discontinued or merged with its Note devices.