By Jonathan Cheng And Ryan Knutson
Samsung Electronics Co. is leaning on bigger screens and a
mobile payment system to try to fend off competition from rivals
like Apple Inc. as it battles declining market share in a rapidly
slowing smartphone market.
The South Korean company on Thursday unveiled in New York a pair
of new devices, including a large-screen variation on its Galaxy S6
Edge flagship handset. So fierce is the competition with Apple that
Samsung moved up its event by several weeks to avoid a direct
confrontation with Apple, which typically plans a September event
to introduce its latest iPhone.
Samsung's Galaxy S6 Edge, first launched in April, was initially
a hit with consumers, but the company wasn't able to fully
capitalize on the device's popularity due to a misreading of market
demand and difficulties in ramping up production of curved screens.
Its latest model, known as the Galaxy S6 Edge+, is an effort to
regain momentum for its premium smartphones (roughly defined as
$450 or more), which drive the bulk of profits in Samsung's mobile
division.
Samsung's mobile division has been hit hard as once-explosive
growth in the global smartphone market begins to cool. In the
second quarter, global smartphone shipments rose 15%, their slowest
pace in six years, according to data tracker Strategy
Analytics.
Even after the release of the Galaxy S6 Edge earlier this year
and its flat-screen counterpart the Galaxy S6, Samsung suffered a
38% drop in operating profit during the second quarter from a year
earlier. Its quarterly mobile profits are now less than half what
they were just two years ago, at the peak of the company's mobile
dominance in 2013.
Compounding the pain, Samsung has lost market share in the wake
of last year's release of two hit Apple products, the iPhone 6 and
iPhone 6 Plus with its larger screen. Those products cut deeply
into Samsung's dominant position in larger-size premium handsets--a
corner of the market that it had mostly to itself.
Strategy Analytics said Samsung's market share fell to 21.2% in
the second quarter, while Apple, and Chinese competitors like
Huawei Technologies Co. and Xiaomi Corp. each gained ground.
On Thursday, Samsung also formally launched its mobile payment
service, Samsung Pay, an attempt to compete with Apple, Google Inc.
and others on mobile payments. The service is compatible with the
three Galaxy S6 smartphones and the new Galaxy Note. It will allow
consumers to pay for purchases with their phones at the checkout
line.
Like Apple Pay, the Samsung service relies on the traditional
payment networks, allowing people to use their existing card
accounts. And while Apple's offering only works with
next-generation readers, Samsung Pay can be used at checkout
counters that use traditional magnetic-strip card readers.
Samsung said the payment service will launch in the U.S. on
Sept. 28, after rolling out in Korea on Aug. 20.
Its new mobile offering is an attempt to ride its lead in curved
screens during a year when Apple is likely to offer only
incremental design changes to its existing iPhone 6 and iPhone 6
Plus devices, said Daniel Gleeson, a senior analyst at IHS
Technology.
The Galaxy S6 Edge+ brings the number of Samsung's flagship
smartphones this year to three. Samsung also unveiled Thursday the
Galaxy Note 5, the fifth iteration in a line of oversize
smartphones.
"By bringing out a larger version of the S6 Edge, Samsung is
trying to compete with Apple more effectively in that space," Mr.
Gleeson said.
On Thursday, Samsung also sought to reposition the Galaxy Note
as a productivity-focused device for business consumers. It will
offer a detachable hard keyboard, similar to the BlackBerry, once
hugely popular among office workers, and it has created a feature
called SideSync, which allows consumers to sync messages across
phones and computers using Windows or Apple's operating systems. It
also teamed up with YouTube to launch a live streaming feature to
its camera, called Live Broadcast.
The company teased the coming launch of a smartwatch, called
Samsung Gear S2. That device will be unveiled at an event in Berlin
on Sept. 3. Both phones will be available in the U.S. and Canada
Aug. 21 and online presale begins today at 3 p.m. EDT.
Write to Jonathan Cheng at jonathan.cheng@wsj.com and Ryan
Knutson at ryan.knutson@wsj.com
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