Fears of Samsung's (NASDAQOTH: SSNLF) forthcoming demise may be greatly exaggerated. Despite an apparent drop in the popularity of its flagship smartphones, the company managed to edge its top competitor, Apple (AAPL 0.50%), in a key category last month.
According to the American Consumer Satisfaction Index, owners of Samsung's smartphones are more satisfied with their devices than owners of Apple's iPhone -- a notable change from the last two years when Apple bested Samsung by a healthy margin.
The ACSI survey
Samsung's mobile phones earned an index score of 81, a significant improvement from last year's 76, and Samsung's highest on record. Apple's wasn't too far behind -- 79 -- but its score was down more than 2% from last year. Interestingly, Samsung's satisfaction score is now the highest among cell phone manufacturers -- besting not just Apple, but also Motorola, HTC, LG, and others.
This appears to be fantastic news for Samsung and its shareholders, who may be struggling to determine if the company is destined to follow in the footsteps of other has-been handset makers. Headlines proclaiming Samsung's demise dominated 2014, as sales of its flagship smartphones disappointed. Earlier this month, the company warned yet again that its quarterly profit would disappoint investors.
But if consumers are satisfied with their Samsung handsets, they may remain surprisingly loyal. Some may even switch from rival manufacturers when it comes time to upgrade.
But the situation may have already changed
Yet, there are a few major caveats worth keeping in mind. The survey was conducted in the middle of 2014 -- before Apple released the iPhone 6 and iPhone 6 Plus. Apple's relatively disappointing showing in the satisfaction survey may have been due to several factors, but the lack of a large screen iPhone -- something that many observers had long criticized Apple for not releasing -- could've hurt the Cupertino tech giant.
Demand for Apple's larger iPhones has been unprecedented, and the phones have received a stellar critical reception. When 2015's ACSI results are released, it would not be surprising if Apple once again overtakes Samsung.
Moreover, the survey is limited to American consumers -- Samsung, as a global company, depends on sales from emerging markets, India, and China. The same holds true for Apple, but Samsung is in a unique position, as its lower-cost handsets face competition from a growing host of Chinese rivals that offer powerful handsets at a fraction of the price.
Additionally, it's worth noting that the Android OEMs Samsung is facing in the U.S. also received better scores in this year's ASCI: HTC's rose more than 4% and LG's rose nearly 3%. Although the consumers that choose Samsung handsets may, on average, be more satisfied with their devices, the presence of increasingly competent Android rivals is an obvious competitive threat. Given that they use the same operating system, switching from a Samsung Galaxy to an HTC One or an LG G3 is a relatively painless process.
The future of Samsung's mobile products
Overall, while I don't think Samsung's fate may be as bleak as its recent earnings reports suggest, the survey's results shouldn't be taken at face value.
It's clear that Samsung's mobile business is facing major issues -- the Korean tech giant seems to understand this. Within the last year, Samsung has replaced its head of mobile design, experimented with new materials in its smartphones, launched quirky new devices, and pushed aggressively into new markets, including wearables and the Internet of Things.
The results of the ACSI should give bulls hope, but Samsung's business remains challenged.
