Apple beats Samsung as Galaxy fades

July 09, 2014 7:00 AM EDT

Samsung used every trick it knew to climb the smartphone pile. But its days as king of the castle are numbered as Galaxy sales growth crumbles before stiffening competition, from market bottom and market top.

Reading the waters

You'd have to be blind not to see this in the latest company results, in anticipation of which its earnings multiple tanked on the Korean stock exchange. Unless the company gets something right soon, these results are not a blip, but a new trend's beginning.

At the top end of the market, Apple has the advantage, yet again. Not only are smartphone sales stalling in significant markets across the planet as customers prepare to migrate from Android to iPhone, or to replace the "Designed in Cupertino" devices they already own, but Apple's existing products have the kind of mojo the "Made in Korea" mob mock but cannot match.

That's why the iPhone 5S remains the world's leading premium device while the "failed" iPhone 5C actually sells more units per week than Samsung's top end Galaxy -- it's a great present for Android users.

Samsung's feeling the pressure at the low end of the market, too. This is because there's a swath of equally well-made (?) and well-designed (?) Galaxy alternatives taking chunks out of the company's sales, despite its subsidized prices. Brands like Huawei and Lenovo are cleaning up.

Cheap imitation

The Korean firm's attempts to create a unique product are severely limited by use of the same Android OS. And the alternatives are cheaper. Indeed, whenever you read about a low-cost brand affecting Apple's smartphone share, you should replace the word "Apple" with "Samsung," as that’s the company that's really feeling the pain.

These are just some of the reasons Samsung's mobile phone arm has experienced such a rapid decline in growth across the last 12 months. After all, in Q2 2013 the company's smartphone arm saw revenues up 47.8% year-on-year; fast forward to the current quarter and these are in decline.

And Apple hasn't shipped a new smartphone model since last year.

Samsung's sparkle (if it ever had any) is sizzling out, a fast-burning star that used and abused anything it took to reach the high point, and is now falling fast as the oxygen burns out. That's Samsung's smartphone galaxy.

Facts and fictions

You don't see it reported quite like that yet. A Bloomberg headline yesterday originally read, "Samsung profit misses estimates as cheap phones struggle", (you can see it in the URL), but the story headline eventually changed to "Samsung sees phone rebound after earnings miss estimates" (based incidentally on one analyst's prediction of future events). I won't discuss the need for news reports to be based on facts rather than fiction: though the first headline reflects facts, the second reflects events that have not yet taken place, which is fiction. One is a news report. The other is a blog.

This blogger thinks Samsung is failing.

There is no good reason to expect its smartphone sales to bounce across the next quarter. Not only is this quarter traditionally flat as people go on vacation, but most consumers already want to see what they will get in the iPhone (as future ChangeWave surveys will confirm).

Made in China

What is interesting in the Bloomberg report is the tacit admission that the fate of the Apple-versus-Samsung fight will be sealed in China. That's interesting because Chinese Apple fans are crazy enough to sell body parts to get an Apple product. Does Samsung have this? No. And iPhones are made in China.

Samsung's Galaxy star is done.

Also read:

The Android-to-iPhone switchers guide

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