Samsung has hit back at claims that its smartphone momentum is slowing, promising to keep ahead of the curve in smartphone design ‘ and even falling victim to the current disease of mobile industry hype, claiming ‘LTE-Advanced’ credentials for just about any new product.
Samsung’s shares have lost almost $20bn since June 7 after analysts cut forecasts for Galaxy S4 sales by as much as 30% on forecasts of market saturation. Its mobile chief, JK Shin, insisted: ‘S4 sales remain strong. It’s selling far stronger than the S3 ‘ and the new LTE-Advanced phone will be another addition to our high end segment offerings that ensure healthy profit margins.’
Shin said the upcoming LTE-A version of the flagship S4 would double peak data speeds and run on Qualcomm’s latest chips. It can make the claim with some credibility in South Korea, where the device will make its debut, since SK Telecom has implemented some elements of the LTE-A menu, notably carrier aggregation, and will offer these commercially from the fall. However, Samsung is promising a global roll-out, and there will be very few markets where its phone will be able to take advantage of the next generation of 4G technologies.
The claims have a whiff of trying too hard, to come up with something different to grab the headlines in a segment where devices are increasingly indistinguishable ‘ a challenge that will just intensify as growth shifts to the midrange. Samsung tends to deal with that kind of game by unleashing huge numbers of models and variants, targeting every kind of user and leveraging its economies of scale. But like Nokia before it, Samsung will find that strength in the volume space must be partnered with high end innovation and success, to maintain margins and brand power.
Of course, it has scored hugely in this respect with Galaxy, and it has started well in tablets too. But users are fickle and even Apple can lose its magic. Distant promises of LTE-A will not be enough to keep momentum behind the Samsung juggernaut. Instead, it will have to spend vast sums ‘ on marketing its brand in a handset space where there will be limited chance for differentiation, and on R&D to ensure it drives the next big thing in devices too.