Samsung Electronics Co., Ltd.'s (SSNLF) Galaxy S5 hit stores in 125 countries – including Europe, the Middle East, Latin America, the US, and most Asian markets – last Friday, accompanied by wearable technology. The smartphone’s sales have been impressive, beating the S4’s launch-day record.
Strong Samsung Galaxy S5 Sales
The company reported that in some markets, first-day sales were double those of the S4. In the US, S5 sales topped launch-day sales of the S4 by 30%. Pricing must be factored in, however; the S5 costs 33,000 won less than the S4 did when it was released, a decision caused by intense competition with fierce rival Apple Inc. (AAPL) as well as with other smartphone makers that have upped their game. Despite the cheaper price, Samsung is offering several free incentives with its S5 worth as much as $600 in some markets.
The free incentives vary across different regions, but most include free subscription to the Wall Street Journal for six months, three months subscription to Evernote Premium, 50GB of cloud storage on Dropbox for two years, PayPal discounts, access to LinkedIn Premium, some health and fitness apps, and games such as FIFA 14.
The launch did not lead to queues as long as those seen when a new iPhone launches, but the overall turnout was nothing to sneeze at. In Rotterdam at one of T-Mobile’s (TMUS) stores, there were 700 people waiting by 3 AM local time, according to Samsung. According to an official at Samsung Electronics, “the pre-orders for the phone are already at several million”. The largest smartphone manufacturer in the world has partnered with five mobile carriers in the US.
The multinational electronics company expects 10 million S5 units to be sold in 25 days. Comparatively, the Galaxy S4, S3, and S2 took 27 days, 50 days, and five months, respectively, to reach the 10 million units sold mark.
Samsung Galaxy S5 Reviews
The new Galaxy flagship has a 5.1 inch 1080p screen, 16-megapixel camera, heart rate monitor, fingerprint sensor, and an IP67 certification that makes the device water and dust resistant. The S5 can withstand up to 30 minutes in meter-deep water. While the device is more evolutionary than revolutionary, reviews point that the areas improved upon make the smartphone an altogether more powerful and an all-round mobile device.
Even so, several reviews term the feel of the device as cheap, due to the dotted plastic back, which gives good grip but does not give a premium look or the wow factor that is evoked by the iPhone or HTC's One M8. On the software side, the Android 4.4 on the S5 has been customized by Samsung’s proprietary TouchWiz experience, which is packed tight with features but is not become more popular among users due to its look and complicated user interface.
However, the phone’s Ultra Power Saving Mode is quite impressive; the feature turns the screen into black and white, shuts all non-essential apps, and does other tricks to yield 24 hours of standby time on just 10% of battery.
Is the Smartphone Market Really Maturing?
According to IDC, the growth of the global smartphone industry is expected to slow to 6.2% in 2018, from 19% this year. In 2013, smartphone shipments crossed the one billion mark, and are expected to reach 1.7-1.8 billion by 2018. Recently, Qualcomm (QCOM) announced its 64-bit processors that will be released in smartphones in 2015. The mobile-processor maker’s CEO, Steven Mollenkopf, has said that the smartphone market is still in infancy.
This seems to be somewhat corroborated by a Samsung official, who said: “There is pessimism that the smartphone market has reached maturity, but today our concern is that we might not have enough devices to sell.” The time taken for Samsung's flagship phonesto reach the 10 million-unit sold mark is declining, regardless of the marginal upgrade in successive phones.
The WSJ reported that Amazon (AMZN) is releasing its 3D-screen smartphone as early as this summer. The device is rumored to have four front-facing cameras, allowing users to view 3D images without the need for special glasses. The smartphone industry does not seem to be slowing down, at least not this year.
New Strategies to Boost Smartphone Sales
It has become evident that innovation in smartphones has declined, because of which companies are opting for as much service integration as they can. The Korean smartphone giant’s move to offer several apps and subscriptions for free with its Galaxy S5 will provide a much-needed edge amid cut-throat competition and declining profitability seen in Samsung’s recent quarter. In a way, it’s a win-win situation for smartphone makers as well as product and service providers; the former will gain in sales while the latter will be able to increase the reach of their services and products. Samsung had nearly 31% of the smartphone market share last year.
Moreover, fingerprint sensors in Apple’s and Samsung’s flagship phones are paving the way for payment systems across the board. We can expect the integration of social media and payment systems with phones’ fingerprint sensors. Facebook (FB) is reportedly diversifying into financial services, and is expected to offer electronic money and payments transfer. Using NFC and fingerprint sensors to enable purchases might become a unique selling point for a smartphone, increasing its sales.