Samsung Electronics is the world leader in smartphone sales, besting Apple
in many countries. Now Samsung of South Korea is stepping up its challenge to
Apple, bringing the battle to its rival’s home turf.
At a packed event at Radio City Music Hall in New York on Thursday, Samsung
showed off the Galaxy S 4, which has a screen slightly larger than the latest
iPhone.

The device has quirky software features, including Smart Scroll, in which
the front camera detects when someone is looking at the phone, and scrolls the
screen according to the angle the phone is tilted. The phone can also be
controlled with hand gestures. Waving a hand down in front of the phone will
scroll up on a Web page, for example.
“Once you spend time with the Galaxy S 4, I’m very confident you’ll find
how its innovations make your life simple and fuller,” said JK Shin, president
of Samsung Mobile Communications, at the company’s first promotional event for
its flagship smartphone.
With the prominent introduction of the phone, Samsung is trying to end its
role as understudy to its more celebrated competitor, especially in the crucial
American market, where Apple still rules. Even as Samsung has surpassed Apple in
global market share, it is often criticized in the United States as an effective
copycat, taking most of its product cues from Apple. But Samsung has begun
flexing its marketing muscle more aggressively here to try to change that
perception.
“This is Samsung’s time right now,” said Gene Munster, an analyst at Piper
Jaffray. “They are clearly gaining more attention this time around than they
ever have.”
Apple itself is showing signs of concern. In an unusual move on the eve of
the Samsung event, Philip W. Schiller, Apple’s senior vice president for
worldwide marketing, gave several interviews in which he discussed flaws in
mobile devices based on Android, the Google operating system used by most of
Samsung’s smartphones.
But Apple still has many big advantages that allow it to defend its
position in the mobile business. Its iPhone 5 was the best-selling smartphone in
the world in the holiday quarter, even though Samsung’s vast portfolio of phones
is bigger than Apple’s. By charging a premium for its products, Apple raked in
69 percent of the profits in the smartphone business last year, compared with 34
percent for Samsung, according to a report by T. Michael Walkley, an analyst
with Canaccord Genuity.
While analysts like Mr. Munster expect Samsung to gain market share in the
United States in the coming two quarters, they predict Apple is likely to still
dominate the crucial holiday shopping season, when gift shoppers buy mobile
devices in droves. That is when sales of the iPhone typically outperform all
other devices. By unveiling its flagship phone just before spring, Samsung is
striking at Apple months before a new iPhone is expected to be released.
“Everyone stays out of the zone of iPhone launch periods,” said Horace
Dediu, a blogger and analyst with Asymco.
Apple’s iPhones fly off the shelves in the United States, but Samsung is
still the top seller of smartphones worldwide. And in the United States, Samsung
is gaining.
In the fourth quarter of 2012, sales of Samsung devices accounted for 30
percent of the American smartphone market, up from 21 percent the previous year,
according to NPD Group, the research firm. For the same time period, Apple’s
iPhone accounted for 39 percent of the market, down from 41 percent the previous
year.
Samsung is far exceeding Apple in its rate of growth worldwide. In the
holiday quarter last year, Samsung shipped 63.7 million smartphones, up 76
percent from the previous year, according to IDC, the research firm. Apple sold
47.8 million, up 29.2 percent from the previous year.
Samsung has won the global volume race by releasing multiple models of
smartphones at different prices and sizes, while Apple has released one new
model every year. Along with the Galaxy S III, the Note II, a Samsung phone with
an even bigger screen, has been a popular seller.
“Samsung’s momentum has been tremendous if you look at where they were
three years ago to where it is today in the smartphone market,” said Chris
Jones, an analyst at Canalys.
Apple of Cupertino, Calif., is famous for products that create markets, as
was the case with the iPhone and iPad. Apple has accused Samsung of stealing
many of its best ideas in the mobile market. Last year, it convinced a jury that
Samsung had infringed Apple patents, winning a $1 billion award that a federal
judge in the case recently reduced to $600 million, a figure that could change
as the case develops. Some recent moves by Apple have appeared to be in response
at least in part to competition from Samsung. It released a smaller iPad and a
bigger iPhone after Samsung had been selling smaller tablets and smartphones
with bigger screens for a while.
“Right now Apple is the challenger, and basically the power dynamics have
changed already,” said Tero Kuittinen, an analyst at Alekstra, which helps
companies reduce their phone bills. “Suddenly, Apple looks a little
defensive.”
Before Thursday’s introduction, Samsung’s new smartphone generated nearly
as much discussion and excitement in technology blogs as a new iPhone. “This is
like the hype around the iPhone was two years ago,” Mr. Kuittinen said. “A year
ago nobody cared about Samsung Galaxy S III. It’s not like the tech blogs wrote
five posts a day about it.“
The Galaxy S 4 has several notable features. One, Dual Camera, allows the
user to take a photograph with the front and rear-facing cameras simultaneously.
At a basketball game, for example, a user can shoot a photograph of the game
with the rear camera and the user’s reaction to it with the front camera; the
two shots appear in one photograph.
Before Thursday’s event, a Samsung employee said the Smart Scroll feature
would rely on tracking eye movements to determine where to scroll. When asked
about the lack of eye-controlled scrolling in the new phone, David Park, a
manager of Samsung’s mobile division, said the company had experimented with
several approaches and decided to use the tilting method.
Samsung also added Group Play, which will allow multiple Galaxy phones to
link together to play a game together. It uses Wi-Fi to bridge a connection.The
phone will be available next quarter on Verizon Wireless, AT&T, T-Mobile USA
and Sprint. The older model, the Galaxy S III, was extremely popular because of
its large screen and software capabilities; for a while it even outsold the
iPhone. The company did not reveal a price for the Galaxy S 4, but said it
should be the same as other premium Samsung phones, which have cost $200 with a
contract.
To defend its lead in the market, Samsung will have to introduce
capabilities in devices and set trends, said Chetan Sharma, a mobile
communications consultant. But Mr. Kuittinen of Alekstra said Samsung has been
setting the trends for a while. This year, Apple should introduce an iPhone with
an even bigger screen, he said.
“They knew that if you do a phone with a huge 5-inch display, it will have
big demand because it turns out people really want to have a phone with an
enormous screen,” he said. “Apple didn’t know that.”