unveiled its latest flagship smartphone Wednesday, hoping extra variety with the new Galaxy Note 10 device attracts consumers who aren’t so likely anymore to want the same new thing.
But the New York City event prompts a question: How much magnetism is left with a top-of-the-line smartphone?
Samsung’s newest premium handsets, once its dominant growth driver, now make up just one-quarter of the company’s total shipments, as affluent consumers see fewer reasons to upgrade. At the same time, the new Galaxy 10 smartphone’s release comes at a pivotal moment with a significant opportunity. As U.S. restrictions slow rival Huawei Technologies Co., Samsung can woo back buyers who had left for the Chinese rival.
Samsung, the world’s largest smartphone maker, launched the Galaxy Note 10 device at Brooklyn’s Barclays Center. For the first time, the South Korean technology giant chose to offer two sizes of the phone, with screens measuring diagonally at 6.3 inches and 6.8 inches respectively. The phone is also equipped with new camera tricks.
Samsung remains the No. 1 smartphone competitor, though profit has fallen as flagship-device sales make up less of total shipments.
Mobile unit’s operating profit
Ratio of flagship-device shipments vs. others
Global smartphone market share
The extra choice reflects an existential crisis rippling across the broader smartphone industry. Manufacturers could once bank on consumers gobbling up whatever new release they offered—typically in a single model sold at a hefty price. But that era has passed, with consumers showing resistance to prices nudging past $1,000. Industry sales have tumbled.
“These events appeal to fewer and fewer people,” said Cliff Maldonado, a senior analyst at BayStreet Research LLC, which tracks device sales. With more frequency, sales of the high-end models fade after the first 45 days, following an initial bump from enthusiasts, he added.
The two variants of the Galaxy Note 10 implement the types of advances expected with a new release. They are slimmer and more powerful, packing more robust processors and batteries. Using Samsung’s “Infinity-O” display, the typically off-center, front-facing camera finds itself now at the top-middle of the phone. Both models ditch the earphone jack.
Phones known as flagships have historically juiced sales for Samsung and rival
They fetch the highest prices, fuel brand image and notch the biggest profits.
Last year, Samsung sold three versions of such devices: two Galaxy S phones and a single Galaxy Note model.
This year, the number will balloon to seven when Samsung adds a third flagship device. Next month, the company plans to introduce the Galaxy Fold, the mainstream industry’s first foldable-screen phone. The nearly $2,000 device folds in half like a book and, when opened, unfurls to the size of a small tablet.
The Galaxy Fold will join the two Galaxy Note 10 variants and four models of the Galaxy S10 in Samsung’s stable of flagships.
Experts warned that Samsung’s expanded library risks cannibalizing the company’s overall sales, as some buyers can upgrade to a new device at a lower price point than previously offered. “The whole Samsung premium tier is getting quite crowded,” said Wayne Lam, an industry analyst at research firm
a market researcher.
Handset makers are searching for answers, as global shipments slid 2% from the prior year for the three months ended June 30, according to Canalys, a market researcher.
Canalys said Samsung, which had posted sales declines over the past year, reported a 6% boost driven mostly by growth from its midtier lineups, as the South Korean firm benefited from Huawei’s stumbles outside China. Although revenue rose, Samsung said last week that its operating profit sank 42% from the prior year, the result of promotions required to boost sales.
A more tiered approach is seen elsewhere across the industry, as buyers show a willingness to forego extra horsepower for a more affordable price.
Apple’s most recent offerings include the lower-cost iPhone XR model that outsold two pricier versions. In May,
’s Google started selling the Pixel 3A phone, offered at half the price of the Pixel 3, which helped drive a doubling in unit sales during the latest quarter. Samsung’s own Galaxy S10 rollout earlier this year included a pared-down S10e variant.
New flagship phones, in their first year of sales, have constituted a smaller share of Samsung’s total shipments in recent years. As recently as five years ago, the premium devices represented the majority of phones sold, according to International Data Corp., a market researcher. But the ratio has fallen to just 26% this year, IDC said.
“There is a loss of that halo around their flagship phones versus the past,” said Ryan Reith, an IDC research vice president.
The Galaxy Note series was the first mainstream plus-size phone when it made its debut about eight years ago, winning a loyal fan base with its S Pen stylus. But it ran into controversy in 2016, when Samsung was forced to issue a global recall of Galaxy Note 7 devices over faulty batteries that caused some devices to catch fire. The incident cost the company roughly $6.5 billion.
Preorders for the Galaxy Note 10 start Thursday, with the devices hitting shelves in select markets on Aug. 23.
Samsung said the base model of the Galaxy Note 10, with 256 gigabytes of memory, would be priced at $949 in the U.S.—a $50 reduction from the prior year. The larger Galaxy Note 10+ starts at $1,099 in the U.S., with a 5G version available initially through Samsung’s website and
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