Samsung's latest S23 series set to face stiff competition from Apple's iPhones

South Korean technology company Samsung is hoping to attract new customers to its latest Galaxy S23 series phones and eventually add to its dwindling bottom line, but industry experts say although the phones come with appealing upgrades they will face tough competition from Apple’s iPhones . For Samsung — which reported its lowest quarterly profits in eight years in the last quarter — another challenge will be to convince the existing users of its S22 series phones to spend more and switch to new devices as many consumers are cutting down on discretionary spending, they added. The S23 series brings several “solid improvements” to Samsung’s flagship devices, but they are incremental enhancements from an already strong previous series, the S22, said Roberta Cozza, senior director at research and consulting firm Gartner. “In today’s market, consumers are extending the lifetime of their phones as the rising cost of living is putting pressure on spending, so this is impacting demand as users will not switch to a new phone that brings small updates of the one they already own. “The S23 line-up is strong, and puts pressure on competing Android flagship smartphones, but replacement sales will remain relatively weak in 2023,” Ms Cozza told The National. Last week, Samsung launched three new phones — the S23, S23+ and S23 Ultra. They come with improved cameras, bigger batteries, faster processors and enhanced privacy features, while integrating some key features from the Galaxy Note range that was discontinued by the world's largest smartphone maker in 2020. Samsung, which expects smartphone market demand to contract this year due to difficult macroeconomic conditions, said it plans to expand flagship product sales with the launch of the S23 series. Gartner predicts a 4 per cent year-on-year decline in the smartphone market this year. Smartphone shipments are projected to total 1.23 billion units in 2023, down from 1.28 billion units in 2022. Last year they dropped more than 10 per cent on an annual basis. New devices are a “worthy upgrade” with the camera, artificial intelligence, and certain custom hardware features, including a customised Snapdragon chip, Tarun Pathak, research director at Hong Kong-based Counterpoint Research, told The National. “However, the challenging part is to attract users from the iOS [Apple’s operating system] camp who normally look at ecosystem-level comparisons than the device per se like S23 series. That is where Apple has an added advantage. Some kind of migration is expected but the reverse could also happen as the iPhone 14 pro series is still going strong.” Seoul-headquartered Samsung reported a 69 per cent drop in fourth-quarter operating profit last year due to weak demand amid a global economic slowdown. Profit in the three-month period to the end of December fell to 4.31 trillion Korean won ($3.5 billion) from a year earlier. Revenue dropped 8 per cent annually to 70.46 trillion won. It was the company’s weakest quarterly profit since the third quarter of 2014. “I think that Samsung is well positioned to win users that want to upgrade from other Android brands as they share a similar ecosystem of applications and services … it is far more difficult to win Apple users as these users are typically very loyal and usually have strongly invested money and time in the Apple ecosystem of devices, content, services and software,” Ms Cozza said. Samsung is in a battle for dominance in the global smartphone market with Apple and the Chinese brand Xiaomi. It led the industry with a market share of about 21.6 per cent last year and produced 260.9 million handsets during the period, according to Massachusetts research company International Data Corporation. It was followed by Apple, which produced 226.4 million handsets and had a market share of 18.8 per cent, and Xiaomi, with 153.1 million handsets and a market share of 12.7 per cent. However, in the fourth quarter of last year, the Samsung was relegated to the number two spot by the iPhone maker. Apple sold 72.3 million iPhones and enjoyed a 24.1 per cent market share in the last quarter, while Samsung sold 58.2 million phones and had a 19.4 per cent market share. Analysts say the S23 could be a good option for new customers looking to move to premium handsets ($600 or above). “We are seeing a healthy upgrade from the installed base of mid-tier phones moving to premium, which is driving the premiumisation trend and this trend is here to stay … loyal Note users who didn’t jump on to the S22 ultra last year are also likely to upgrade,” Mr Pathak said. “Overall, we see the S23 series a strong contender for Samsung to gain share in the premium segment from Galaxy upgrades and new Android users entering the premium segment.” The share of the premium segment is increasing over the years as the overall smartphone market declined. In 2020, premium handsets accounted for nearly 13 per cent of the total smartphone market, according to Counterpoint. This jumped to 16 per cent in 2021 and is expected to have reached 21 per cent last year. Analysts predict Samsung can attract more customers with its new foldable devices that are expected to hit the market in the second half of this year. “Samsung’s emphasis on premium category is to create a niche segment through its foldable offering which is still in the early stages of growth cycle. Consumers, specifically high-end users in [a] few markets, are showing growing acceptance for foldable devices of Samsung with new form factors,” Manish Pravinkumar, senior consultant, Middle East and Africa, at Canalys, told The National . “Effective utilisation of its robust channel network, IoT [Internet of Things] ecosystem and efficient promotional strategy will be critical for Samsung in order to drive growth,” he added.

Samsung's latest S23 series set to face stiff competition from Apple's iPhones

Convincing its existing users to spend more and upgrade to new devices will be a challenge for the South Korean company, analysts say