Samsung's new phone hotter than its stock
Despite positive reviews of the Galaxy S III, the South Korean company faces skeptical investors.
According to media reports, a user in Ireland is claiming that his Galaxy S III smartphone exploded and caught fire while it was docked in his car. Thankfully, no one seems to have been hurt and the South Korean company is investigating the cause of the fire, which it says was not related to the battery. At least one review did note the smartphone was warm to the touch during use, though it expressed no alarm. Regardless, the timing couldn't have been worse for the company.
As The Wall Street Journal reported Monday, analysts are skeptical about Samsung's growth prospects. Several brokerage firms cut their estimates for the company's second quarter even though Samsung executives have said they expect it to be stronger than the first. Analysts are concerned about lackluster demand for consumer electronics, weak pricing for memory chips, and delays in the launch of the Galaxy S III smartphone in some markets.
Samsung has a lot at stake with the Galaxy S III, which is the company's answer to the Apple (AAPL) iPhone. Last year, Samsung toppled Nokia (NOK) to become the world's largest mobile phone company. The Galaxy S III needs to be a huge success if Samsung is to meet its goal to double smartphone sales this year to about 20 million.
The smartphone, which the company began selling last week in the U.S., has its share of fans. A review in Computerworld gushed, "The Galaxy S III is a sexy piece of hardware, all angles and curves; its back panel is so smooth and glossy that you can actually see your reflection in it." CNET chimed in that the Galaxy S III is "good enough to recommend on its own against the iPhone 4S."
Global shipments of the Galaxy S III may surpass 10 million units in July, the highest ever monthly sales figures for Samsung. However, the smartphone market is not immune to the problems of the broader economy. Samsung had a 25.9% share in April, up 0.5 percentage points from January, while Apple gained 1.6 points to 14.4% during the same time, according to comScore.
Competition between the Galaxy S III and the iPhone will only intensify ahead of the launch of the iPhone 5, whenever that occurs. The two companies hope cool features and sleek designs will win customers. Unfortunately, smartphones will eventually become commoditized and have to compete aggressively on price. That will be great news for consumers but bad news for makers.
Jonathan Berr does not own shares of the listed companies. Follow him on Twitter@jdberr.
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