After a rough year, Samsung (NASDAQOTH: SSNLF) finds itself desperately in need of a smartphone win. On background, the follow-up to Samsung's wildly successful Galaxy S4 iteration -- the Galaxy S5 -- didn't sell as well and the company found itself with poor year-over-year financial results in the third and fourth quarters. In the desired U.S. market, the company lost its No. 1 market share position to Apple (NASDAQ:AAPL) in the three months ended in December, according to Kantar Worlpanel's data.
Needless to say, Samsung is desperately in need of a hit with its next-gen Galaxy S6. And if the newest reports are of any indication, it looks like Samsung may have a hit on its hands. After an earlier rumor that Samsung is tripling Galaxy S6 Edge production to meet demand, the newest report states "more than twice as many Galaxy S6 and Galaxy S6 Edge preorders have been placed than Galaxy S5 preorders."
A smart design choice
If you've looked at Samsung's newest phone, you'll probably notice it looks familiar. The phone takes heavy design cues from Apple's newest iPhone iterations. Earlier I argued this was a wise decision. By mitigating Apple's design supremacy, Samsung competes on features, specs, and ecosystem. Samsung can take solace in the fact that Apple has copied Samsung before by increasing its screen size. In addition, Samsung has watched its China market position wither from Chinese vendor Xiaomi, a company that is widely faulted for copying Apple.
While it is important to note these are preorder numbers, and demand could temper quickly, Samsung needs a device to reverse the trend of luxury customers that are increasingly choosing Apple over Samsung. Earlier this year, Tim Cook pointed out the iPhone 6 and iPhone 6 Plus "experienced the highest Android-Switcher rate in any of the three previous years." Research firm Cowen & Co. estimates 25% of iPhone 6 purchases were Android Switchers. Recently, Apple's doubled down on converting Android users by extending their trade-in program to non-Apple phones.
Samsung excels where most people don't care
For Samsung, there is one clear advantage over Apple -- hardware. For example, Samsung's Galaxy S6 boasts a massive eight-core processor (quad core 2.1 GHz and quad core 1.5 GHz processors) with three GB of RAM. Compare that to Apple that boasts only of a dual-core 1.4 GHz processor with one GB RAM. Subsequently, when it comes to multi-core benchmark performance, the new Samsung unit crushed Apple's iPhone in a Geekbench performance test.
However, for most users, this simply isn't important. Bench marking results are not indicative of real-world performance -- Apple's iPhone held up well against Samsung in real-world speed tests. For users, features and ecosystem tend to be better drivers of customer satisfaction than raw processing power. Samsung can add certain phone-specific features to differentiate itself from Apple -- like wireless charging, but is dependent upon Google for ecosystem supremacy.
In addition to the aforementioned features and ecosystem demands, phone design is an extremely important part of its value proposition. Samsung shrewdly took heavy design cues from Apple's iPhone -- and if early pre-orders are of any indication, the company could have a hit on its hands.