Will Samsung's S5 Success Hurt Apple Inc?
One of the key takeaways from the Samsung announcement was that the high-end smartphone market, especially in developed economies, may not be saturated after all. The South Korean conglomerate reported a pickup in sales in Europe and the United States, once thought by many analysts to be less important going forward for the industry. Everyone was looking at China as the key battleground.
Another piece of information gleaned from Samsung was that the increased S5 sales may have been due to several technological improvements made to the device. Users have been clamouring for phones that can better withstand "normal" everyday use, including being dropped in water, and can snap photos in the dark. The company made the latest Galaxy more resistant to moisture, and dust and the camera and battery life were improved.
Samung could learn a few things from its main competitor too. Apple pays about $208 for the parts installed in the 32 GB version of the iPhone 5s. Components used in the 32GB S5 cost $251 to procure. Advantage: Apple.
Ironically, Samsung actually benefits from iPhone sales too. The brains of the 5s model, the A7 processor, is fabricated by the Korean company. Apple is reportedly looking elsewhere to buy the CPU that will be used in the next generation device.
If Apple moves away from Samsung for the iPhone 6, expect the Korean company to be affected a bit, but if Samsung can reduce the cost of the components used in future S5 production, or in next generation models, its investors could profit.
In spite of the initial success of the Galaxy S5, Apple might not be as affected as one might think, especially if the company incorporates some of the features inherent in the Samsung device. Another reason for optimism in Cupertino is that the high-end smartphone market, including in established economies, where Apple is king, is not stagnating.
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The article Will Samsung's S5 Success Hurt Apple Inc? originally appeared on Fool.com.Mark Morelli owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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