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Why Samsung is no longer Cinderella at the iPhone ball

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Apple has reported a record sales slump, while Samsung’s latest phones win market approval. How did it come to this? ARTHUR GOLDSTUCK tells the tale.

What’s wrong with this picture? Global smartphone sales down 3%, Samsung sales down 4%, Apple iPhone sales down 16%.

Or this one? Samsung revenue up 6% and profit up 12%, Apple revenue down 13% and profit down 23%.

For one thing, Samsung is tracking global trends in smartphone shipments, which is hardly wonderful news for a brand that wants to run ahead of the market. But, for another thing, Apple has lost the magic sauce.

One could be sympathetic and believe CEO Tim Cook when he blames a tough “macroeconomic environment”. But, during the worst financial slump in living memory, the big bad Global Financial Crisis of 2008-2009, Apple not only held its own; it kept growing, quarter after quarter.

The iPhone had been launched in 2007, and kept getting better, allowing the company to outperform not only the market, but also all forecasts. It kept breaking through every barrier, eventually helping Apple rack up 13 years of continual growth that had begun with the launch of the first iPod.  That is 51 quarters, of which around 8 had seen the destruction of entire national economies across the globe.

Tough macroeconomic environment? Apple used to trample on tough macroeconomic environments. Rather, try tough competitive environment. In the growing Chinese market, iPhone sales slumped 26%. Meanwhile, Chinese brands like Huawei, Oppo, and Xiaomi hungrily took global markets from their respective positions as the world’s 3rd , 4th and 5th biggest smartphone brands.

Which brings us to the Samsung Galaxy S7. It marks four out of the last five Samsung devices flagship phones that have no longer been part of the catch-up game with Apple. Back in 2012, The S3 was the best that Android could offer at the time, but also for the first time showed that someone else also gets what a smartphone should be. Still, it was considered a Cinderella, a poor copy of the finery invented by Apple for the iPhone ball.

Apple stuck doggedly to its finery: a form factor premised on a mantra that the world was satisfied with a 4” display. At 4.8”, the S3 was already pulling away. However, the iPhone 4S, still enjoying the Steve Jobs halo effect, easily kept up.

In 2013, the Samsung Galaxy S4 truly disrupted the ball, offering a phone as close to perfect as the technology of the time allowed. It overreached with some features, like gesture control.  But compared to its peer, the iPhone 5, it was a breath of fresh air, with a 5” display, 50% more power than the iPhone, and a camera that for the first time gave Apple a run for its money.

It gave Samsung undisputed leadership of the smartphone market. Along with the Note series, which introduced the phablet format and proved a voracious market appetite for even bigger displays, the S4 would prove to be a wake-up call at Apple’s Cupertino HQ.

However, Apple pushed the snooze button a couple of times. Instead of coming to the party with a larger iPhone, it delivered the 5S and a youth-oriented 5C, with the same 4” display, but in multiple colours. Crucially, it fell short of market expectations that it would be a phone targeting lower-income users and emerging markets.

Luckily for Apple, the 2014 contestant from Samsung, the S5, was a rare miss-step, offering almost no good reason for anyone to move on from the previous edition. In effect, Samsung did an Apple, offering only incremental improvements.

Both brands then upped their game phenomenally, with Apple’s alarm finally penetrating its snooze late in 2014, and a wide-awake look in the mirror resulting in the iPhone 6 and 6 Plus – respectively 4.7” and 5.5” phones, targeting both the regular Samsung flagships and the Note phablet. Apple reported record sales.

Then, in 2015, came the Samsung Galaxy S6, with its beautiful curved screen Edge as well as a flat-screen option, and an absurdly good camera on both. Apple responded in time-honoured fashion later in the year, with a 6S and 6S Plus, delivering – surprise, surprise – only incremental improvements.

At he beginning of 2016 it followed with the cunning trick of cramming iPhone 6-like power into an iPhone 5-type body with 4” display and calling it the SE. Because, you know, the world is still hungry for 4” displays.

In contrast, the new Samsung S7 Edge pushes the curved device’s display from 5.1” to 5.5”, while the regular S7 keeps to 5.1”. Both have less powerful cameras but more powerful processors and more RAM, along with substantially bigger batteries. The larger phone increases battery life by up to 50% over its predecessor.

Samsung added one other feature that probably made the biggest contribution to its sales holding pattern: it dropped the recommended price by more than 20%.

In a market where the latest features are often not enough to persuade someone to upgrade, and where a good phone remains a good phone for several years, the ever-rising pricetags on flagship phones from the leading brands was bound to result in a backlash. That was probably the main reason the S6 and S6 Edge were sales disappointments, despite arguably being the best smartphones in the world.

Which brings up one of the less publicised numbers from the latest Apple results: gross profit margin, which is the real secret sauce of Apple’s astounding profits and its unprecedented $233-billion cash pile.

Gross profit margin for the last quarter was an eye-wateringly joyful 39.4%. However, that was down 40.8% for the same period the year before and from it being routinely above 40% in years before. Apple has offered guidance for the next quarter that it will fall yet again.

In the “macroeconomic environment” of increasingly thrifty customers, ferocious competitors and Samsung’s cutting edge devices, don’t expect it to begin rising again any time soon.

* Arthur Goldstuck is founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter and Instagram on @art2gee

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Samsung in lock-step with its rivals?

Tonight Samsung will kick off the next round in the smartphone wars with the S10 range, writes ARTHUR GOLDSTUCK.

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When Samsung unveils the new S10 smartphone at an event in San Francisco today, it will mark the beginning of the 2019 round of World War S. That stands for smartphone wars, although Samsung would like it to be all about the S.

Ever since the launch of the Samsung Galaxy S4 in 2013, Samsung has held both technology and thought leadership in the handset world. Back then, Apple’s iPhone 5 was the last device from the American manufacturer that could lay claim to being the best smartphone in the world. With the 2013 launch of the iPhone 5s, Apple entered an era of incremental improvement, playing catch-up, and succumbing to market trends driven by its competitors.

Six years later, Samsung is fighting off the same threat. Its Chinese rival, Huawei, suddenly wrested away leadership in the past year, with the P20 Pro and Mate 20 Pro regarded as at last equal to the Samsung Galaxy S9 Plus and Galaxy Note 9 – if not superior. Certainly, from a cost perspective, Huawei took the lead with its more competitive prices, and therefore more value for money.

Huawei also succeeded where Apple failed: introducing more economical versions of its flagship phones. The iPhone 5c, SE and XR have all been disappointments in the sales department, mainly because the price difference was not massive enough to attract lower-income users. In contrast, the Lite editions of the Huawei P9, P10 and P20 have been huge successes, especially in South Africa.

Today, for the first time in half a decade, Samsung goes into battle on a field laid out by its competitors. It is expected to launch the Galaxy S10 Plus, S10 and S10 e, with the latter being the Samsung answer to the strategy of the iPhone XR and Huawei P20 Lite.

Does this mean Samsung is now in lock-step with its rivals, focused on matching their strategies rather than running ahead of them?

It may seem that way, but Samsung has a few tricks up its electronic sleeve. For example, it is possible it will use the S10 launch to announce its coming range of foldable phones, expected to be called the Galaxy X, Galaxy F, Galaxy Fold or Galaxy Flex. It previewed the technology at a developer conference in San Francisco last November, and this will be the ideal moment to reclaim technology leadership by going into production with foldables – even if the S10 range itself does not shoot out the lights.

However, the S10 handsets will look very different to their predecessors. First, before switching on the phone, they will be notable by the introduction of what is being called the punch-hole display, which breaks away from the current trend of having a notch at the top of the phone to house front-facing cameras and speakers. Instead, the punch-hole is a single round cut-out that will contain the front camera. It is the key element of Samsung’s “Infinity O” display – the O represents the punchhole – which will be the first truly edge-to-edge display, on the sides and top.

The S10 range will use the new Samsung user interface, One UI, also unveiled at the developer conference. It replaces the previous “skin”, unimaginatively called the Samsung Experience, to introduce a strong new interface brand.

One UI went live on the Note 8 last month, giving us a foretaste, and giving Samsung a chance to iron out the bugs in the field. It is a less cluttered interface, addressing one of the biggest complaints about most manufacturer skins. Only Nokia and Google Pixel handsets offer pure Android in the local market, but One UI is Samsung’s best compromise yet.

It introduces a new interaction area, in the bottom half, reachable with the thumb, with a viewing area at the top, allowing the user to work one-handed on the bottom area while still having apps or related content visible above. One UI also improves gesture navigation – the phone picks up hand movements without being touched – and notification management.

The S10 range will be the first phones to feature the latest Qualcomm Snapdragon 855 chip, at least for the South African and American markets. That makes it 5G compatible, for when this next generation of mobile broadband becomes available in these markets.

They will also be the first phones to feature Wi-Fi 6, the next generation of the Wi-Fi mobile wireless standard. It will perform better in congested areas, and data transfer will be up to 40% faster than the previous generation.

The phones will be the first to use ultrasound for fingerprint detection. If Samsung gets it right, this will make it the fastest in-screen fingerprint sensor on the market, and allows for a little leeway if one pushes the finger down slightly outside the fingerprint reader surface. It does mean, however, that screen protectors will have to be redesigned to avoid blocking the detection.

Not enough firsts? There are a few more.

Most notably, it will be the first phone range to feature 1 Terabyte (TB) storage – that’s a thousand Gigabytes (GB) – at least for the top-of-the-range devices. Samsung last month announced that it would be the first manufacturer to make 1TB built-in onboard flash storage. Today, it will deploy this massive advantage as it once again weaponises its technology in the fight for smartphone domination.

  • Arthur Goldstuck is founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter and Instagram on @art2gee

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IoT set to improve authentication

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By Sherry Zameer, Senior Vice President, Internet of Things Solutions for CISMEA region at Gemalto

As it rapidly approaches maturity, the Internet of Things (IoT) is set to continue a transformational trajectory, introducing new efficiencies in multiple fields by allowing measurement and analysis on a scale that has never been possible before. From agriculture to logistics, from retail to hospitality, from traffic to health, from the home to the office, the applications for monitoring ”things” are limited only by the imagination.

And South African (and African) businesses are showing abundant imagination in their practical deployments of IoT solutions in multiple settings, creating a better tomorrow through almost universal measurement and the introduction of new levels of convenience – including how to access locations, devices and services securely.

Any company, whether South African or international, should bear in mind that understanding consumer expectations can be the key to unlocking the full potential of IoT devices and related smart services.

According to Gemalto’s latest Connected Living study, improving the way consumers authenticate themselves to services is one of the most anticipated benefits of IoT, highlighting a desire for a more seamless and secure IoT experience.

Consumers are interested in advanced ways of authenticating themselves through automatic (based on behavioral patterns) or biometric techniques, lessening the need to have to intervene manually, all in the name of a much more streamlined authentication process. Smartphone manufacturers like Apple and Samsung have already placed fingerprint and facial recognition high on the agenda. There is also a widespread positive sentiment towards IoT’s potential for improving the quality of home life through connected, smart appliances.

Personalised services is something else that wins consumers over. In fact, a fluid, personalised and unified experience with continuity of services, together with security and privacy, is critical for the successful implementation of any technology.

And those types of services are today quite possible. With everything being connected – from small gadgets to digital solutions for large enterprises – IoT is no longer just a buzzword. That much is clear in a piece from Vodacom IoT managing executive Deon Liebenberg. Writing for IOL Online, Liebenberg provides insight into the sheer range of applications for IoT: the 20 use cases he cites range from the obvious, like transport and logistics, to the connected home and wearables; he even suggests tagging pets with IoT transmitters, for those who always need to know the whereabouts of the family cat.

Low-cost tags fitted to cats, dogs, lamp posts, shipping containers or other items are just one part of the puzzle, however. There are other two pieces; arguably the most complex part is the availability of communication networks in areas where there aren’t any WiFi networks, or indeed, anything else.

And that’s where the bigger takeaway from Liebenberg’s piece and other IoT trends articles becomes apparent. The communication networks are there, as are those tags: dedicated IoT networks (like LoraWAN, SigFox and narrowband IoT) are all available in South Africa.

So, too, is the third and final essential component. Software which is able to process the data generated by the tag and transmitted over the IoT network and into the internet. In this regard, there’s no shortage of solutions available from cloud providers like AWS and Azure; electronics giant Siemens, too, is in on the action, having recently launched a new cloud-based IoT operating system to develop applications and services for process industries, including oil and gas and water management.

This combination means it is quite possible right now to enable just about any use case. Business owners, who will know best how IoT can add value in their organisation, can now see their ideas becoming reality. Most crucial of all, IoT solutions delivering new levels of efficiency and convenience are not only possible, they are able to be offered with the simple and effective security that will drive consumer acceptance.

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