The vendor’s newly launched S10 is a major improvement, but looks unlikely to halt Huawei’s surge
Samsung’s newly launched Galaxy S10 range is certainly a vast technical improvement on predecessor the S9. Yet analysts suspect that even a strong commercial performance will not be enough to halt the rise of Huawei to global number-one spot for market share.
The S9 has not performed as Samsung expected throughout the year since its launch in 2018. It had a troubled unveiling, with many of its features leaked before it was shown at last year’s Mobile World Congress (MWC) in Barcelona.
On top of that, some observers considered these features to be disappointingly incremental compared with the previous year’s S8. The most notable changes – a more user-friendly fingerprint sensor and enhanced rear dual-aperture lens – were not, for example, seen as particularly tangible upgrades for consumers.
These feelings were reflected on the sales front: according to Canalys, 13.1 million S9 and S9+ devices were shipped in 2018, lower than the 16.6 million figure for the S8 and S8+ the previous year.
It’s early to speculate on future sales for the S10 and its variants, but it’s safe to say that the device has benefited from a groundswell of excitement since its unveiling. Instead of leaving this until MWC, Samsung stole a march by announcing the device to the world at its own Galaxy Unpacked event on February 20 – a move that most analysts agree was a smart one.
“It was shrewd by Samsung to make a move before MWC,” says Canalys senior analyst Ben Stanton. “It was able to take two or three days of solid headlines in all the big tech publications and then roll that into MWC and have all the new phones available in the booth for journalists to play with. Assuming next year’s products are available in the same kind of time frame, I’d be surprised if they didn’t repeat that.”
Galaxy Unpacked was lent added excitement by Samsung’s announcement of the Galaxy Fold, its foray into the foldable phone sector. This similarly came out ahead of a flurry of foldable announcements by a surprisingly large range of manufacturers at MWC.
Samsung’s move was an effective way of circumventing the struggle to stand out amid the noise of MWC, points out uSwitch head of commercial for broadband and mobiles Ernest Doku. “The unveiling was a strategy to avoid the scrum that is MWC. There’s a raft of manufacturers that were going to be talking about their flexible devices, their 5G-enabled devices and their plans for the future, so for Samsung to not only steal a march but impress a lot of early viewers with the range of devices they had on offer was entirely sensible – and it’s an approach that is highly likely to continue.”
IDC associate vice president for EMEA Francisco Jeronimo agrees: “MWC drives a lot of attention for everyone and no one pays attention to every single device until after the event, so it’s hard to digest and write the proper stories and reports about devices. What Samsung did allowed us to have time to test and try the device, and play with it a few days before MWC, so they definitely got more traction than if they had made the announcement at MWC.”
Befitting of a flagship 10th-anniversary product, it helped Samsung that the S10 looked the part. Even the S10e, the supposed ‘lite’ variant of the range, is a big improvement on the S9 in terms of battery, storage, processor, display and RAM. There’s not much that innovates above and beyond the offerings of competitors, but it at least appears a substantial leap to consumers.
“Getting hands-on with the devices, you can’t help but feel this is range that would have been great to see last year,” says GfK technology director Imran Choudhary. “The new Infinity O-display really is edge-to-edge, with no home button or notch and a tiny pinhole for the camera visible in the top right corner. The fingerprint scanner now sits directly in the front screen. All of these features and the associated price points could help Samsung in the coming months as consumers come face to face with the devices.”
Choudhary adds: “The S10e is a welcome addition to the new range. Given its dimensions, specs, colours and price point, it now gives Samsung that cover at the entry level of the premium end of the market, with an RRP of £669.”
On the pricing front, analysts generally agree that as a premium device, the S10 range isn’t going to attract much outcry – especially given that Apple has already flirted with a £1,000 cost for the iPhone XS. It’s now accepted that high-end phones are expensive, and the only way to curb device retention and persuade consumers to make a new purchase is to offer a truly visible change in new devices.
This is even more the case when set against the rise of the refurbished market – which, as one of the mobile industry’s fastest-growing sectors, posted seven per cent growth worldwide in 2018, according to Counterpoint Research.
“Consumers are so used to [high] price points that it’s not a major concern anymore,” says Jeronimo. “It’s not the biggest challenge for Samsung. The S10 is expensive, definitely, but it’s within the range for that kind of device from direct competitors and it is not a brand that is trying to make cheaper devices with premium features.”
Doku asserts that Samsung is doubling down on the premium aspect: “Samsung is not just [working] in reaction to the slightly behind-the-curve performance of the S9, but the incredibly strong competition from both the usual players and the swathe of Chinese manufacturers new to the UK market. In particular, those vendors have already shown a lot of success in a more price-sensitive European market, and that has really forced Samsung to double down and deliver devices that are incredibly compelling.”
For all these reasons, sales expectations for the S10 are bullish, despite global smartphone shipments seeing a fifth consecutive quarterly decline, according to IDC. Although it’s early to make concrete assertions, Jeronimo says sellers have told IDC that S10 pre-orders have been much better than for the S9. Doku adds that initial interest for the S10 and S10+ has been “very strong” at uSwitch.
Stanton says early indications suggest that the S10 is doing much better than its predecessor, driven by the new iteration being “tangibly different”. The average consumer, he says, “can see or feel how it’s different, whereas previously that was much more challenging.”
There is disagreement on how the S10 will affect sales of the S9 and S8. Whereas a new device often signifies reductions in the prices of its predecessors, Stanton believes this is less likely with the S10 because of its strong promise.
He says: “What we see in the last few years with Samsung, especially with the S9, is that it discounted heavily towards the back end of 2018. I suspect that if the S10 is selling very well, there may be less of an incentive to bring the price of that device down – especially as Samsung wants to extract as much margin from that device as possible.”
Doku, however, has seen strong deals for earlier S-series models and believes these are important for Samsung to counter the rise of mid-range smartphones from the likes of Xiaomi, Oppo and, of course, Huawei, especially in the UK.
What sales seem unlikely to do is halt therise of Huawei in the smartphone global rankings by market share. According to Statista, the Chinese manufacturer’s share rose from 10.7 per cent in Q4 2017 to 16.1 per cent in Q4 2018, whereas Samsung’s fell slightly from 18.9 to 18.7 per cent over the same period. And Jeronimo anticipates that Huawei will overtake Samsung in the next 12 to 18 months.
Stanton asserts, meanwhile, that the S10 won’t be a determining factor in deciding who’s on top this time next year.
“The battle will be won by devices priced between £100 and £400 around the world, and it will really come down to what Samsung does to the A series and its low-end lines.”
Samsung’s precipitous drop in market share in China – from 20 per cent in 2013 to less than one per cent today, according to Strategy Anaytics – is somewhat counterbalanced by Huawei’s lack of presence in the US, but the imminent worldwide arrival of the Huawei P30 series may help decisively tip the balance.
Feedback on board
While Samsung’s number-one position in the smartphone market may be challenged, the vendor has shown with the S10 that it is recognising the weaknesses of the S series and accommodating customer feedback. Arguably chief among these is the S series’ virtual assistant, Bixby. This has never quite caught the public’s imagination in the same way as Apple’s Siri or Amazon’s Alexa, and was not at the front and centre of marketing for the device. The challenge has remained in making Bixby stand out, but having been quite late to the virtual-assistant table after launching two years ago, Samsung appears to be recognising that Bixby isn’t going to be a chief sales driver.
The manufacturer has instead made the more recognisable Google Assistant easier to access, with Doku saying this amounts to a realisation by Samsung that “consumer choice is paramount”.
“Enabling the Bixby button to access other functionality on the phone is a realisation in part that consumers are, from a smartphone perspective, far more familiar with the applications of Google Assistant and that enabling customers to have that choice is still key,” he says.
Stanton believes that, going forward, Bixby may have some Samsung smart home uses in the future, but won’t impact S10 sales – and, indeed, that it may actually take more of a back seat in future devices: “I wouldn’t be surprised to see [Bixby] slowly start to be de-emphasised, simply because they were very late to the voice assistant market and functionality of that product is increasingly falling behind cross-platform competitors that have more investment, a bigger base of developers and a bigger base of people that use them on a daily basis. I don’t expect a key piece of smartphone marketing to revolve around Bixby again.”
Even with a reduced focus on virtual assistance, the S10 is a major entry in the S series canon as a 10th-anniversary device – and it invites curiosity as to what Samsung will do next.
Industry developments have pointed towards what might be on the cards for next year. What looks like the current ceiling in terms of price and performance is set to be pushed upwards with the advent of 5G and foldable devices.
The S10 5G, set for launch in the second half of 2019, will be Samsung’s first new device to support 5G – and it won’t just do that, but will also have a larger battery and display.
Stanton, who styles the device an “S10++”, reckons a second-half release is unlikely in the UK, though. “I suspect the allocation for that kind of product will be skewed heavily towards Korea and the US,” he says. “It doesn’t make sense for Samsung to put a lot of European skews into production.”
It seems that device innovationis low on the list of priorities for next year, says Jeronimo: “[Refreshing design every year] doesn’t make much sense when people are holding their devices for three years. If you start refreshing every year, it will upset customers.”
5G is exciting for those within the industry, but visible innovations are more likely to gain a reaction among consumers themselves, says Choudhary, who thinks we should look to the foldable sector for future developments likely to turn their heads.
“Next year, it is fair to expect another iteration of the Galaxy Fold, along with a Galaxy S range update,” he says. “Given that folding phones are new in the market for all the manufacturers, there is no tried and tested approach on how to make a folding device, and each brand is bringing their take to the market.”
Ultimately, says Choudhary, it will come down to consumers to decide which types of folding devices become the blueprint for years to come – and manufacturers still have plenty of wiggle room to turn their heads
“There is plenty of room for development, and someone is yet to launch a foldable device that is the size of current smartphones when open but much smaller when folded to fit better in your pocket,” he says.