Samsung targets iPhone with new GalaxyS

Samsung Electronics, the world’s second-largest handset maker by sales, is looking to the GalaxyS, its latest Android-based smartphone, to regain market share in the fast-growing smartphone market.

In spite of its size, and 20 years of experience in making mobile phones, the South Korean company has struggled to gain ground in the high-margin smartphone market, overshadowed by stronger rivals such as Nokia, Apple and Research in Motion.

But the company – expected to announce its second-quarter earnings guidance on Wednesday – hopes that the GalaxyS can become an iPhone killer and pave the way for Samsung to establish a real presence in this segment. The new phone, using Google’s Android operating system, has been on sale globally since last month.

The GalaxyS has had a strong start in the domestic market. More than 200,000 units were sold in the first week alone. Apple has sold 800,000 iPhones in South Korea since launching late November last year.

Samsung has a more than 20 per cent share of the global market for conventional handsets, making it second only to Nokia. But smartphones – phones that come with computer functions formerly found only in much bulkier devices – remain one of the technology giant’s weaknesses, with its market share at less than 5 per cent, against Nokia’s 39 per cent, RIM’s 19 per cent, and Apple’s 16 per cent, according to market researcher Strategy Analytics.

It is important for Samsung to muscle its way into the segment because smartphones remain the one bright spot in an otherwise slowing handset market. Samsung aims to double its market share to more than 10 per cent by the fourth quarter by trebling its smartphone shipments this year.

It aims for global monthly sales of 1m GalaxyS units by supplying the product to more than 100 operators. The company is relying on its close relationship with mobile networks round the world, who are happy to see an Android alternative to the iPhone.

Lee Seung-hyuk, analyst at Woori Investment & Securities, says: “Many carriers shun the iPhone because of its profit sharing structure against them. Samsung can substantially increase its smartphone market share if the GalaxyS positions itself as the representative of the Android-based phones.”

However, judging by GalaxyS, many analysts still doubt if Samsung is ready to take on Apple, given its lack of content and applications.

Carolina Milanesi, researcher at Gartner, says the GalaxyS has “very impressive” hardware but its Android-based “ecosystem” – with which third-party applications are available for downloading – is still not at the level of Apple.

Industry watchers also say that Samsung should better differentiate its phones from other brands in terms of content and applications in order to become a leading player in the smartphone market. Most product reviews are judging the GalaxyS by how it compares with the iPhone.

Apart from pushing GalaxyS, Samsung has also developed its own software platform, Bada, to allow independent developers to create applications for use on its handsets.

However, analysts have noted that Samsung’s Bada phone – called Wave – fails to provide different experiences to users from its conventional multimedia phones.

“A richer user interface, integration of social networks and a strong ecosystem are all key assets for a winning formula,” says Ms Milanesi.