Boom or bust: Samsung’s Galaxy S4
Commentators who think Apple is falling behind in the “smartphone wars” almost universally point to Samsung as the major challenger. However, when Samsung revealed its new Galaxy S4 smartphone last month, it became clear that there were no game-changing improvements. (Not coincidentally, following the S4 launch event, Apple logged its best two-day stock performance in months.) The S4 is slightly bigger than its predecessor, but as Apple critics were quick to point out following the iPhone 5 and iPad Mini launches, changing a product’s size is not really “innovation.” The S4 has a variety of other hardware upgrades compared with the S III, such as a better camera and faster processor. (Sound familiar?)
The biggest “innovations” for the S4 are a variety of software features. One pauses a video when the user looks away from the screen. Another allows the user to bring up a preview by hovering over an email message or a photo. Another is designed to allow users to scroll up and down with their eyes. However, early reviewers — such as Tiernan Ray of Barron’s and Jessica Dolcourt of CNET — didn’t see any of the new software capabilities as “must-have” features. They also found that many didn’t work nearly as well in practice as in theory. While Samsung may be able to correct some of the software’s limitations by the time the S4 hits store shelves, it is nevertheless clear that Samsung is also running out of ways to spruce up its phones.
Foolish conclusion
Apple critics may be right that the iPhone 5 didn’t have any particularly innovative new features. However, that isn’t due to any particular fault on Apple’s part: Other vendors such as Samsung and Research In Motion are encountering the same problems. I wouldn’t go so far as to say that the smartphone experience has been “perfected,” but there is limited room for improvement after all of the progress that has occurred in the past five to 10 years.
The leveling of the playing field does mean that Apple’s advantage over its rivals has narrowed considerably. However, shareholders need not panic. Apple has a large, loyal installed base of users who want the iOS experience — which is exclusive to Apple, obviously. Upgrades for these users will produce a significant stream of recurring revenue. Meanwhile, Apple can continue to seek growth in emerging markets, by adding new carrier partners and potentially by releasing a cheaper iPhone ($300-$400 unsubsidized). Apple’s growth may be more modest going forward, but the recent worries that Apple is falling behind competitors have been blown out of proportion.
The article Have Apple, Samsung, and BlackBerry Hit a Dead End? originally appeared on Fool.com.
Fool contributor Adam Levine-Weinberg owns shares of Apple and BlackBerry and has long January 2014 $13 calls on BlackBerry. The Motley Fool recommends and owns shares of Apple and Google.
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