Samsung's Galaxy S5
BARCELONA, Spain -- The Galaxy S5 may be Samsung's flashiest device of the year, but it won't be the only important one.
The Korean electronics giant on Monday unveiled its
newest flagship phone
with all -- or at least most -- of the bells and whistles that
consumers have come to expect. The device, with a fingerprint scanner
and heart rate sensor, is sure to attract plenty of buyers in developed
markets like the US and Western Europe. However, it's the cheaper
smartphones for emerging regions that could really make a big difference
for Samsung this year.
Increasingly, the battleground for mobile
won't be waged on the streets of New York or London but in the alleys
of Beijing and Mumbai. The market for low-end phones should grow about
17 percent each year through 2018 while the high-end smartphone segment
-- the category the
Galaxy S5 calls home, along with
Apple's iPhone
-- will increase only 4 percent annually, according to ARM Holdings,
the chip company whose technology powers most of the mobile devices in
the world. In mature regions, the biggest markets for high-end phones,
essentially everyone who wants a smartphone has one.
"There's no
question that emerging markets will provide a very large growth
opportunity for mobile," Cristiano Amon, Qualcomm's president of mobile
and computing, told CNET.
That means Samsung, Apple, and all of the other
handset makers must adjust. They have to keep developing their
high-end devices
to boost their brands and attract buyers in markets like the US. But
they also need to put more focus on their cheaper smartphones and figure
out how to compete in places like Brazil. For Samsung, that's
not too much of a stretch. The company already is the top smartphone
vendor in mainland China and other developing markets. It has long
followed the strategy of releasing a wide variety of devices at
different price levels, and that has helped buoy its position in many
regions.
However, it's also seeing more competition from
mobile up-and-comers
such as Huawei, Lenovo, and Xiaomi. Right now those companies are
gaining in China, but they also have plans to aggressively expand
outside their home country. Lenovo, for one, will do that partly through
its Motorola acquisition. That's something that should have Samsung
worried.
"Samsung is still doing fairly well in most emerging
markets," Jackdaw Research analyst Jan Dawson said. "But it's not
growing share in most markets, just holding onto its position."
The Galaxy S5 comes in five colors.
Chinese vendors won't be the only phone makers targeting
price-sensitive markets. Countless companies are showcasing their newest
devices this week during the Mobile World Congress trade show here, and
along with new flagship devices, most also have some sort of offering
for developing markets with more limited features and lower pricing. For instance: LG, which showed off its G Pro 2 and G2 Mini, also unveiled an
entry-level LTE device called the F70. And Nokia, the predominant Windows Phone maker,
launched an Android device -- the Nokia X -- intended to garner attention, and buyers, in emerging markets. Even software giant
Microsoft showed off a Qualcomm reference design
that would help handset vendors make smartphones quickly and cheaply.
The company has been benefiting from Nokia's strong position in
developing nations.
"We're open for business on Windows Phone to
anyone who wants to build a Windows Phone," said Nick Parker, the
Microsoft executive who handles the company's relationship with hardware
companies.
Of course, selling a bigger percentage of
lower-priced phones than high-end devices comes with its own problems.
The volumes will be much higher, but handset vendors don't make as much
from those cheaper devices. Apple, in a bid to protect its high level of
profitability, has decided not to play in low-end or even midrange
devices, at least for now.
Samsung won't be following the same
strategy as Apple, but it will have to decide just how far it's willing
to go. The company's first course of business this year will be getting
the Galaxy S5 into the market and convincing consumers that its tweaks
are worth the upgrade. But after that, emerging markets await.
