Here’s a good Throwback Thursday for you.
The Wall Street Journal ran the following headline almost two years ago to the day:
“Has Apple Lost Its Cool To Samsung?”
The article was published a few days after Samsung delivered a blowout earnings report. Profits were up 76% on strong smartphone sales. Apple at the time reported relatively flat earnings for the same quarter, causing the stock to tank.
What a difference two years make.
On Wednesday, Samsung gave another dismal earnings report, a cap to a very disappointing 2014. Profits were down 27%, which Samsung blamed on slowing smartphone sales.
Meanwhile, Apple reported its biggest quarter ever Tuesday. It sold $US74.5 million iPhones and made $US18 billion in profit, the biggest quarterly profit for any company in history.
It’s also possible Samsung is close to losing its spot as the top smartphone vendor in the world. Apple and Samsung were virtually tied in smartphone unit sales last quarter, the research firm Strategy Analytics told Bloomberg. It’s safe to say that the two are likely neck and neck as Samsung shrinks and Apple grows.
It will get tougher for Samsung in 2015 too. Android makers like Xiaomi have figured out how to make really nice devices that cost half as much as Samsung phones. And since Samsung has failed to prove it can differentiate its phones enough to justify the premium price, Android lovers are transitioning to cheaper, well-built phones from scrappy startups like Xiaomi.
Samsung is gearing up to launch its new flagship phone, the Galaxy S6. Sources familiar with Samsung’s plans have told me the phone will have abigger focus on design and be made of metal. Samsung will also launch a version of the Galaxy S6 with a curved screen, similar to the Galaxy Note Edge that launched late last year.
But that likely won’t be enough to reverse Samsung’s fortunes in the near term. Samsung’s best, most profitable phones are still very expensive. Xiaomi, Huawei, Oppo, and are able to undercut Samsung on price. Unless Samsung has some sort of must-have innovation on a software level up its sleeve, people are going to continue to choose cheaper Android phones or the iPhone instead.
Applestill has plenty of room to grow the iPhone business. Apple CEO Tim Cook told analysts Tuesday that only a small fraction of current iPhone users have upgraded to the iPhone 6 or 6 Plus. Cook also said there’s plenty of opportunity in emerging markets where many people are still making the transition from regular phones to smartphones.
Even though the iPhone is much more expensive than a lot of Android phones, it offers a unique experience people love. And thanks to the big-screen iPhone 6 and iPhone 6 Plus, it sounds like a lot of people are making the switch to iPhone from Android.
Samsung enjoyed two years of success at the high end of the smartphone market while Apple sat on its hands and continued to make tiny-screen iPhones. But now, between the big-screen iPhones and nimble Android manufacturers, Samsung’s best days in mobile appear to be behind it.