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Will iPhone 5 Dent Samsung Galaxy S III Sales ?

September 14th, 2012

iPhone 5 actual hardware specifications do not exceed those of existing competing devices. The Apple way worked very well in the past before competitors emerged. We thought that iPhone 5 might bring it further forward, beyond the shadow of iPhone 4S, yet this doesn’t appear to us to be the case this time.

With the Samsung Galaxy S3 selling 20Mn Units in 100 Days, the high-end segment of the smartphone market is getting saturated, we believe that it may be difficult for iPhone 5 shipments to beat high market expectations, as Apple had achieved in the past.

Apple still maintains a premium-price policy in iPhone 5, in spite of heightened challenges from competitors, and this should be positive for the overall smartphone industry. Both the thickness and the weight have been reduced by around 20% vs. iPhone4S is mostly from the adoption of aluminum casing (vs. glass casing), rather than any breakthrough in component technologies.

Samsung enjoys unique status – both an important component supplier to Apple and Apple’s biggest smartphone competitor. Samsung is able to maintain high margins mainly due to 1) a high proportion of high-end components; and 2) a low proportion of shipments to Apple, while the profitability of other Apple component vendors has substantially deteriorated.

Samsung Galaxy S3 will have pricing power and is backed by the Android OS with millions of Apps is seeing very high acceptance in Asian Countries and thus if it is rightly priced, it will continue its sales momentum. Apple’s High Pricing of iPhone 5 will see subdued demand in Asia.

On a related note, Samsung has unveiled the Samsung ChatOn – Mobile and Web Based Micro Social Networking.

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