Samsung's Best Days Are Behind It
The Wall Street Journal ran the following headline almost two years ago to the day:
"Has Apple Lost Its Cool To Samsung?"
The article was published a few days after Samsung delivered a blowout earnings report. Profits were up 76% on strong smartphone sales. Apple at the time reported relatively flat earnings for the same quarter, causing the stock to tank.
What a difference two years make.
On Wednesday, Samsung gave another dismal earnings report, a cap to a very disappointing 2014. Profits were down 27%, which Samsung blamed on slowing smartphone sales.
Meanwhile, Apple reported its biggest quarter ever Tuesday. It sold $74.5 million iPhones and made $18 billion in profit, the biggest quarterly profit for any company in history.
It's also possible Samsung is close to losing its spot as the top smartphone vendor in the world. Apple and Samsung were virtually tied in smartphone unit sales last quarter, the research firm Strategy Analytics told Bloomberg. It's safe to say that the two are likely neck and neck as Samsung shrinks and Apple grows.
It'll get tougher for Samsung in 2015 too. Android makers like Xiaomi have figured out how to make really nice devices that cost half as much as Samsung phones. And since Samsung has failed to prove it can differentiate its phones enough to justify the premium price, Android lovers are transitioning to cheaper, well-built phones from scrappy startups like Xiaomi.
But that likely won't be enough to reverse Samsung's fortunes in the near term. Samsung's best, most profitable phones are still very expensive. Xiaomi, Huawei, Oppo, and are able to undercut Samsung on price. Unless Samsung has some sort of must-have innovation on a software level up its sleeve, people are going to continue to choose cheaper Android phones or the iPhone instead.
Even though the iPhone is much more expensive than a lot of Android phones, it offers a unique experience people love. And thanks to the big-screen iPhone 6 and iPhone 6 Plus, it sounds like a lot of people are making the switch to iPhone from Android.
Samsung enjoyed two years of success at the high end of the smartphone market while Apple sat on its hands and continued to make tiny-screen iPhones. But now, between the big-screen iPhones and nimble Android manufacturers, Samsung's best days in mobile appear to be behind it.