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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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CES: And thanks for all the beer!

Last week, the Las Vegas expo showed off its fun side with state-of-the-art technologies for making and enjoying beer, writes BRYAN TURNER

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From craft beer-making machines to robots that pour beer, CES had more beer than usual in Las Vegas last week. And even free beer if you found the right stand. Stampede’s saloon-style booth offered beer to visitors who tried out its latest drones, virtual reality, and other gaming products. No beer tech, though.

Here are some of the beer technologies that stood out:

LG HomeBrew – Craft beer made at home

LG’s HomeBrew craft beer-making machine,  debuted at CES 2019, brings the brewing process home thanks to single-use capsules,  a self-cleaning feature, and an algorithm optimised for fermentation. 

Like a Nespresso coffee machine, the beer maker uses capsules, which contain malt, yeast, hop oil and flavouring. At the press of a button, LG HomeBrew automates the whole procedure from fermentation and carbonation to ageing. A companion app lets users check HomeBrew’s status at any time during the process, from their handsets.

The beer machine not only offers a simple way to make craft beer, but also enhances the quality of beer it makes. The fermentation algorithm intelligently controls the fermenting process with precise temperature and pressure control. It automatically sanitises itself, using nothing more than hot water, ensuring everything is hygienically clean for the next batch.

Designed with discerning beer lovers in mind, HomeBrew allows for in-home production of batches of more than 4 litres of beer in a variety of styles. The following five distinctive, flavoured beers are available now: 

  • Hoppy American IPA
  • Golden American Pale Ale
  • Full-bodied English Stout
  • Zesty Belgian-style Witbier
  • Dry Czech Pilsner

The only catch? It takes about two weeks to make, depending on the beer type.

“LG HomeBrew is the culmination of years of home appliance and water purification technologies that we’ve developed over the decades,” said Dan Song, president of LG Electronics Home Appliance & Air Solutions Company. “Homebrewing has grown at an explosive pace, but there are still many beer lovers who haven’t taken the jump because of the barriers to entry, like complexity, and these are the consumers we think will be attracted to LG HomeBrew.”

Click here to read about the party speaker that holds beer and robots that pour beer.

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CES: Alienware gets Legend-ary

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At CES in Las Vegas last week, Dell’s Alienware released a family of high-end, thin, light, and affordable machines for both amateur and professional gamers – and a new identity.

Alienware marked CES 2019 as a brand milestone with the debut of a new design identity, Alienware Legend. It aims to set a new bar of excellence for what gamers want most – performance and function. Alienware says it evaluated multiple concepts and chose one that was the biggest and boldest departure from its current look.

Alienware Legend, says the company, stays true to the brand’s core design tenets, taking cues from its deep roots in sci-fi culture and its early industrial designs, to distinguish the brand from the rest of the industry. The new Legend design is optimised with cutting-edge thermal cooling technology to achieve and sustain overclocking power, improved AlienFX lighting, and ultra-thin screen borders. It also unveiled a new “three-knuckle hinge” design that reduces the overall dimension while creating a stronger assembly, all combining to yield a better gaming experience.

“We’re excited to come to this year’s CES with some truly groundbreaking products, next-gen software and strategic partnerships that will bring more people to experience PC gaming and advance the industry,” said Frank Azor, vice president and general manager of Alienware. “The legend design answers the call for more and better from our gaming community, and the new G Series laptops will make PC gaming even more accessible to those looking for high-performance gaming at a cost they can appreciate.”

Click here to read about Alienware Legend in action with the Area-51m and m-series laptops

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