Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) has scheduled the “Unpacked 2014 Episode 2” event on September 3 to unveil its Galaxy Note 4 device. With the phablet, the Korean company hopes to turn around its ailing fortunes in the high-end smartphone market. The Korean company is facing tough competition in the high-end segment from Apple Inc. (NASDAQ:AAPL)’s iPhone 5S.
Galaxy Note 4 has to be a revolutionary product to revive Samsung’s fortunes
But the biggest problem for Samsung is rapidly growing local vendors in emerging markets like China and India. Samsung will hold its Unpacked event simultaneously in Beijing, Berlin and New York on September 3. The Galaxy Note 4 launch comes after Samsung posted unexpectedly sharp decline in Q2 earnings. Its second-quarter earnings fell about 20% YoY. The company’s market share declined from 32.6% to 25.2%. And, according to Strategy Analytics, Samsung’s total shipments fell by 1.5 million units to 74.5 million units.
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Galaxy Note 4 comes at a crucial time. But there are several factors working against Samsung. Neil Mawston, director of Strategy Analytics, said the company is currently in “holding pattern.” At this stage, Samsung’s new device launches are focused on stabilizing rather than regrowing the smartphone business. The company has to come up with a revolutionary design that came shake up the market.
Can Galaxy Note 4 compete against iPhone 6?
Reports suggest that the Galaxy Note 4 will be more of an incremental update rather than a revolutionary device. It is expected to feature a 5.7-inch QDH display, Snapdragon processor, and an ultraviolet sensor. Neil Shah, director of Counterpoint Technology Market Research told PCWorld that the Korean company has to demonstrate with its new device that it has learned from the “Galaxy S5 debacle.” The S5 disappointed most customers and critics.
Moreover, Apple is expected to unveil its highly anticipated iPhone 6 just days after the announcement of Galaxy Note 4. Latest reports claim that the U.S. company has scheduled a major event on September 9 to launch its device. The iPhone 6 may hurt at least initial sales of the Galaxy Note 4. Smartphones sales in developed countries have stagnated. Therefore, to turn around its business, Samsung must focus on emerging markets such as China and India.
Local vendors in China and India troubling Samsung
With over 1.25 billion population each, both countries represent huge potential. For instance, India added a whopping 28 million new mobile subscribers during the first quarter this year, highest in the world. However, the emergence of local vendors in these countries has become a big cause of concern for Samsung.
According to a new study by Canalys, Xiaomi has dethroned Samsung to become the top smartphone vendor in China. Xiaomi’s sales increased 240% last year. In India, Micromax has surpassed Samsung to become the largest mobile phone company. Micromax, valued between $7-$10 billion, almost tripled its revenue last year.
Shah said these Chinese and Indian brands offer similar specifications at 30%-40% lower prices than Samsung. Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) has got involved in reference designs with its Android One to help such companies make high-quality devices below $100. The first smartphone under Android One will come from Micromax later this year.