How will Apple’s iPhone 6 affect Samsung?

September 10, 2014
Lee Jae-yong, left, vice chairman of Samsung Electronics, and Apple CEO Tim Cook.

Lee Jae-yong, left, vice chairman of Samsung Electronics, and Apple CEO Tim Cook.

By Kim Yoo-chul

Apple has taken the fight for smartphone supremacy to the home turf of its biggest rival, Samsung Electronics, by introducing bigger iPhones.

This latest move by Apple marks a role reversal, with Apple following Samsung for once instead of the other way around.

Early on Wednesday (KST), Apple released two new iPhones ― a 4.7-inch model and a 5.5-inch model.

Apple CEO Tim Cook showed off the iPhone 6 and the iPhone 6 Plus. Both are larger than the current iPhone 5.

Apple has so far been reluctant to introduce larger iPhone models ― in contrast with Samsung, which has taken the-bigger-the-better approach since 2011 with its Galaxy Note-branded series.

“Samsung has been dominating the global phablet market over the last few years,” an industry source said.

“The new iPhones mean Apple has dropped its design philosophy, as the U.S. firm was maintaining its smartphone screens between 3.5 inches and 4 inches. It’s interesting to see Apple’s attempts to reach into new territory to yield returns.”

Lee Young-hee, head of Samsung’s marketing for mobile business, told reporters during this year’s IFA fair in Berlin that Samsung was proud to open up a new chapter in phablets, an industry term for a device that combines the functions of smartphones and tablets. Samsung’s latest Galaxy Note 4 has a 5.7-inch OLED screen.

The new iPhones are expected to have an impact on Samsung, according to analysts.

But Samsung, which is also the world’s top supplier of displays and computer chips, is expected to benefit from the new Apple products as well.

“The introduction of larger-screen iPhones eliminates a key differentiator that has insulated Samsung and LG large-screen flagship smartphones from iPhone competition,” said Ian Fogg, a senior director of IHS, a leading market research firm. “Apple will overtake Microsoft’s former Nokia devices unit to ship the second-largest number of mobile handsets in 2014 after Samsung.”

Demand for large smartphones and phablets remains healthy because the larger screens are suited to media content such as games and movies.

Therefore, Samsung’s Note-first approach is unsurprising given market trends. Phablets have been gaining greater popularity for years, ever since the arrival of the original Galaxy Note, whose 5.3-inch screen now looks mainstream by comparison.

Asia has strongly embraced larger phones, with many people opting to own a phablet instead of both a phone and a tablet.

IDC, another market research firm, said smartphones with screens measuring more than 4.5 inches accounted for half the shipments by major handset manufacturers for the first six months of this year.

“Because Apple has stronger brand loyalty in products and a stronger ecosystem in devices, Apple has prepared the ground to make sure its app ecosystem will be available quickly on the new iPhones by providing developers with a tool to easily support different screen sizes in iOS8,” said the director at IHS.

Another front where Apple aims to compete with Samsung is the market for wearable devices.

However, on this topic the director said, “Moving into a new category is a bold, expensive and risky effort. This Apple Watch is a first-generation device, and whether it is successful or not, Apple will aim to make it a must-have companion for every iPhone owner.”

Korea was excluded as one of Apple’s “first-tier countries” for the new devices, because it is not such an important market for Apple in terms of revenue.

The new iPhones are expected to ignite fiercer competition among the nation’s three mobile carriers ― SK Telecom, KT and LG Uplus ― as LG, the smallest, could introduce the Apple phones for the first time in five years.

Apple said the iPhones would support VoLTE and confirmed that its products would be compatible with LG Uplus networks. This is the first sign that LG might introduce iPhones in Korea since its rival KT hit the sector in December 2009.

“We are trying to persuade Apple to supply us with more iPhones because we will have the chance to increase our share in Korea thanks to Apple support,” said an official at LG.