AAPL is in the spotlight after Samsung unveiled the Galaxy S4 last week. Analysts have been debating whether Samsung Galaxy S4 will hurt Apple Inc. (NASDAQAAPL) and if so to what degree. Gene Munster is not concerned about competition from Samsung, others are a bit more concerned. Nomura is in the later camp and states that the Galaxy S4 will help Samsung 'overtake Apple.'
Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) announced the Galaxy S4 last week. Nomura states 'while clearly a step forward relative to the S3, there is much that is evolutionary about the S4, rather than revolutionary. Nevertheless, Nomura sees the S4 potentially helping Samsung to overtake Apple in high-end smartphone shipments during 2013.'
Nomura's thoughts on the Galaxy S4 include:
Some compelling new features, although some will only work with other S4s or new Samsung TVs, arguably limiting their appeal.
35-40m high-end S4 and Note sales per quarter seems feasible, which would see Samsung Electronics Co., Ltd. overtake Apple in terms of high-end volumes.
Nomura does not expect the S4 to materially change the competitive landscape in developed markets, where Apple’s brand and device and app ecosystem sustains its leadership.
However, the large screen size clearly appeals in many Asian markets and is a clear differentiation in Western markets as well. Also, some features such as Air Touch, eye tracking that pauses running apps when you look away, the ability to operate the screen with gloves, etc. are all clear differentiators relative to AAPL's iPhone, in their eyes.
Nomura is concerned over whether or not Apple’s management changes have disrupted the company’s ability to materially advance iOS with the likely release of iOS7 in June. Their checks (including Asian counterparts who cover some of the Apple supply chain) also suggest that the company is not working on a 4.5” to 5” device for launch in 2013.
If correct then AAPL’s competitive position in fast growing emerging markets could continue to wane, and Samsung may become a bigger threat still in Western markets.
More importantly still, Nomura sees a risk that AAPL and Samsung have to increasingly compete against one another to drive growth – rather than rely on the failings of rivals – resulting on pressure for share gains and increased price-based competition.