April 24, 2013 at 5:38 PM ET
Samsung comes out with a shiny new phone with a huge screen and so many features we can't even count them all. This same week, Apple CEO Tim Cook tells the world that the company won't launch "amazing new hardware, software and services" until at least the fall. Staring down at the comparatively smallish screen of the iPhone — with an interface that hasn't changed much in six whole years — one might start to think that Samsung is blowing by Apple like it was standing still.
Though the Samsung juggernaut is a bigger threat to Apple than any other Android device maker, Samsung isn't gaining ground because of some failure of Apple's. Rather, it's been doing three things very well, explains one analyst: improving hardware quality, offering different products to different customers, and spending like crazy on advertising.
"If you look at device specifications and the quality of handsets," Chetan Sharma, mobile industry analyst, told NBC News, "Apple fanatics will argue that Apple is still quite a bit ahead, but in consumers' minds, there is a level playing field." He added, "In some ways, like screen size, Samsung is perceived as better."
In fact, globally in 2012, the Galaxy S III traded body blows with the iPhone in a near stalemate that only ended when Apple introduced the completely redesigned iPhone 5, according to Strategy Analytics.
Since Apple can still release a flagship phone that beats all comers — thanks mainly to incredible brand magnetism and leverage of Chinese manufacturing muscle — Samsung works hard to sell cheaper smartphones, especially in countries where they don't have carrier-subsidized phone pricing. In America, last year's iPhone may be free (with two-year contract), but it still costs upwards of $500. Apple simply doesn't have a $250 to $300 option, and that hurts global sales, says Sharma.
Samsung also famously launches niche products like the Galaxy Note, and has seen runaway success with them. From the Note on the high end down to the Galaxy Y, a phone seen mainly in developing countries, Samsung's menu is more palatable — though less profitable — across the globe, where it trounces Apple in overall smartphone shipments, says Strategy Analytics.
In the U.S. market, sales tracker NPD reported that Apple was still ahead at the end of 2012, controlling 38 percent of smartphone sales. However, Samsung is right on its tail, having gone from 21 percent at the end of 2011 to 30 percent a year later.
The third reason for the surge in Samsung's popularity is ad spending. "Samsung now spends four to five times as much as Apple in global advertising, and advertising clearly moves units," Sharma said.
The fact that people are susceptible to ads (like the one for the Galaxy S III, above) has justified Samsung to keep adding features that look cool but don't always work very well. As a result, feature bloat is increasingly noticeable among Samsung phones — now packed with dual-view camera, eye tracker, pedometer and more. Meanwhile, the phone bears less and less resemblance to the already rich Android experience designed by Google.
So, while all of this should put the fear into Apple — and perhaps inspire the company to work on a lower-end iPhone for developing countries and a 4.5-inch (or larger!) screen for its next flagship, and maybe spend a bit more on advertising — Samsung's rise does not immediately spell Apple's downfall.
In the past half year in the U.S., AT&T has sold 13.4 million iPhones — and just 2.8 million of every other smartphone in its stores. The real victims of Samsung's rise to power have been every other smartphone maker except Apple. (Insert obligatory "at least, for now" here.)