After crowning Samsung as Apple's heir, analysts now rethinking their math

Posted:
in iPhone edited January 2014
Sales of Samsung's flagship Galaxy S4 are falling short of initial estimates as much as 30 percent, causing an implosion of $20 billion of the firm's market value as analysts reconsider their formerly rosy expectations.

Galaxy S4


A report by Reuters described cuts by a flurry of analysts in the face of "industry data pointing to a fast-saturating segment," the same concerns that battered Apple's share price last fall.

The report cited Byun Hanjoon, an analyst covering Samsung for KB Investment & Securities, as saying "I'd say most forecasters including myself had this conviction that they'll outperform again - because it's Samsung. They had beaten expectations before, which led many to believe they are bound to excel again with the S4."

Samsung announced having shipped a record ten million units of the new S4 to its global partners, beating its shipments of last year's S3 model with a number that was also compared to Apple's Initial sales of 5 million iPhone 5 units.

Lackluster sales prospects going forward

The difference was that Apple actually sold 5 million units in its first three days across just 9 launch countries. Samsung's larger number related only to carrier shipments, not end user sales, and included 60 launch countries, with Korea, China and India among that number, all major markets Apple didn't reach with the iPhone 5 in its initial launch weekend.

Reuters incorrectly reported that Samsung sold those 10 million phones in its first month. Analysts caught up in the hysteria of the S4 launch initially predicted blockbuster sales of the device and continued momentum of sales, but are now backpedaling as actual sales data becomes available."The S4, in reality, also lacks any real wow factor."

The report cited analysts as pointing to "lacklustre prospects in Europe and [Samsung's home territory of] South Korea in particular," adding that "the S4, in reality, also lacks any real wow factor."

It cited a report by Goldman Sachs analyst Michael Bang, who wrote, "The Street, including Goldman Sachs, admittedly extrapolated the first-quarter earnings momentum through the year. This resulted in very optimistic earnings expectations."

Sales estimates by Bank of America Merrill Lynch have been cut by 5 million throughout 2013, but Reuters noted that "most analysts have reduced their estimates for S4 shipments to around 7 million units a month from their previous average expectation of 10 million."

Even the loss of 5 million units would equate to a drop in $1 billion in operating profits, the report cited analysts as stating.

Seeing what sticks as the buzz fades

In contrast, Apple sold 37.4 million iPhones in the most recent Q2 ending in March, beating Wall Street's institutional consensus of 35.86 million.

Samsung has been trying to prop up sales of the S4 by experimenting with a flurry of models sporting smaller screens, even larger screens, ruggedized coatings and a fancier camera.

The S4 is also accompanied by the Note phablet series and flanked by a wide range of low end models, many of which still run very outdated versions of Android. The more models Samsung produces, however, the more work it will assume in optimizing its designs and support across all of those produces."I don't think there'll be as much buzz surrounding new product launches as it used to be."

The company tried to warn analysts earlier in the year that it knew that easy sales in the smartphone market were drying up and that competition was getting tighter.

"The furious growth spurt seen in the global smartphone market last year is expected to be pacified by intensifying price competition, compounded by a slew of new products," the Telegraph UK wrote in January, citing a Samsung report that cautioned, "demand for smartphones in developed countries is expected to decelerate."

Going forward, analysts expect that "conservative forecasts will prevail," Reuters noted.

"Expectations for innovation have been lowered," Hanjoon observed, "and I don't think there'll be as much buzz surrounding new product launches as it used to be."

Next target for smartphones: the middle

Apple has so far focused almost entirely at the high end of the market, only ever offering one flagship model of iPhone and selling previous years' models as its entry level options. That positions Apple very similar to the point it was when it only sold one version of the iPod, just prior to releasing the iPod mini and nano models that rapidly ate up the lower end of the MP3 market.

Apple is widely expected to release a new lower priced iPhone model later this year, aimed directly at eating into the middle tier of smartphone sales.

Reuters noted that "mid-tier models," currently "aggressively" targeted by "Chinese rivals" is "a segment in which Samsung has relatively weak positioning," noting that the mid-tier segment "accounted for less than 15 percent of Samsung's total shipments last year."

Samsung also faces the threat of a broad U.S. import ban over multiple patent infringements, and two U.S. patent cases that involve monetary damages still being determined.

Samsung looks like iOS 6
iOS 7 will force Samsung to redesign its software or look as old as last year's iOS.


Apple's significant new redesign of iOS 7 will also force Samsung to either come up with its own parallel refresh or end up looking dated with a variety of features and app designs and its an overall appearance taken directly from previous versions of Apple's iOS.
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Comments

  • Reply 1 of 137
    zintharzinthar Posts: 20member
    This is actually worrying news for Apple as well, IMO. Pretty much every premium smartphone released in the past year has failed to live up to the sales expectations of Wall Street. In the case of Apple, the surprising story has been how much the iPhone 4 and 4S at lower price points have cannibalized sales that likely would otherwise have been iPhone 5 sales -- for many customers, having an iOS smartphone with excellent build quality is all they needed; the extra speed and features of the iPhone 5 weren't enough fro them to spend more for it.

    I suspect that Samsung is finding that many of its customers are opting for the price-reduced Galaxy S3 instead. Or the market for high-end Android will no longer accept cheap build quality and has opted for the HTC One.

    Or, perhaps most likely, many smartphone customers aren't bothering to upgrade when their contracts are up because their current phone works well enough and they're waiting until the day that they drop their phone in the toilet to use the upgrade pricing.

    Although most people on this site, including myself, would never trade away LTE or the speed and extra screen size of the iPhone 5 for a $100-200 discount on an older model, we're the minority of consumers.

    When the 5S and cheap plastic iPhone are released, I think Apple will discontinue the iPhone 4, 4S, & 5 altogether and force consumers to choose either the premium build of the 5S, or a plastic iPhone if they want the free with subsidy option.
  • Reply 2 of 137
    nicksgnicksg Posts: 5member
    Now there's a surprise-analysts got it wrong!!
    Just as they did when the Apple share price was up over $700.It is the usual analysts herd mentality-the savvy investor should virtually always act contrary to analysts.
  • Reply 3 of 137
    correctionscorrections Posts: 1,363member

    Quote:

    Originally Posted by Zinthar View Post



    This is actually worrying news for Apple as well, IMO. Pretty much every premium smartphone released in the past year has failed to live up to the sales expectations of Wall Street. In the case of Apple, the surprising story has been how much the iPhone 4 and 4S at lower price points have cannibalized sales that likely would otherwise have been iPhone 5 sales -- for many customers, having an iOS smartphone with excellent build quality is all they needed; the extra speed and features of the iPhone 5 weren't enough fro them to spend more for it.



    I suspect that Samsung is finding that many of its customers are opting for the price-reduced Galaxy S3 instead. Or the market for high-end Android will no longer accept cheap build quality and has opted for the HTC One.



    Or, perhaps most likely, many smartphone customers aren't bothering to upgrade when their contracts are up because their current phone works well enough and they're waiting until the day that they drop their phone in the toilet to use the upgrade pricing.



    Although most people on this site, including myself, would never trade away LTE or the speed and extra screen size of the iPhone 5 for a $100-200 discount on an older model, we're the minority of consumers.



    When the 5S and cheap plastic iPhone are released, I think Apple will discontinue the iPhone 4, 4S, & 5 altogether and force consumers to choose either the premium build of the 5S, or a plastic iPhone if they want the free with subsidy option.


    It was also "worrying news for Apple" when it was left the only vendor selling a $400 10GB hard drive MP3 player in quantity and there were all these flash memory MP3 player options available for significantly less. Lots of worrying.


     


    And then when Apple took over the flash memory MP3 market there was lots of worrying that all these smartphones that were getting popular were able to play MP3s, and what would Apple do after people stopped needing an iPod? Lots of worrying. 


     


    And then when netbooks started getting the headlines, there was lots of worrying that Apple's Mac lineup needed a netbook version or all these $200 netbooks running Linux or Windows 7 would destroy the market for full priced, high end devices. Lots of worrying.


     


    Lots of worrying. You're not alone, don't worry. There's lots of worrying out there.

  • Reply 4 of 137
    nairbnairb Posts: 253member
    Quote:
    Originally Posted by Zinthar View Post

    This is actually worrying news for Apple as well, IMO. Pretty much every premium smartphone released in the past year has failed to live up to the sales expectations of Wall Street. In the case of Apple, the surprising story has been how much the iPhone 4 and 4S at lower price points have cannibalized sales that likely would otherwise have been iPhone 5 sales -- for many customers, having an iOS smartphone with excellent build quality is all they needed; the extra speed and features of the iPhone 5 weren't enough fro them to spend more for it.



    I suspect that Samsung is finding that many of its customers are opting for the price-reduced Galaxy S3 instead. Or the market for high-end Android will no longer accept cheap build quality and has opted for the HTC One.



    ...............

     

    Nice post. I agree totally. It is like computers 2000-2007 ish. The hardware was struggling to keep up with the software and this was a problem for most users. For the last 5 years or so that has not been the case. Only high end users were regularly updating their hardware as an off the shelf mid range PC can do everything most people want.


    It is the same with the phone now. My 12 month old HTC is faster and has more memory than a PC I bought in 2001. I will ride it into the ground as the newer bells and whistles are getting less and less appealing.

    And then there are always the people who like to flash the latest gadget, even if it is not adding annything functionally significant to their previous phone.

  • Reply 5 of 137
    DED, I like the very last paragraph! See how they copy...
  • Reply 6 of 137
    nasseraenasserae Posts: 3,157member

    Quote:


    Apple's significant new redesign of iOS 7 will also force Samsung to either come up with its own parallel refresh or end up looking dated with a variety of features and app designs and its an overall appearance taken directly from previous versions of Apple's iOS.



    They will not copy it... It will be the natural progress of technology /s

  • Reply 7 of 137


    I was hoping for evidence that Samsung didn't actually sell the 10 million phones in the first month, but there was none.  Calling shipments anything but sales only rings true when the shipments have to be returned.  There is no evidence of that whatsoever.


     


    Speaking of shipped versus sold, did anyone else notice that Tim Cook announced SHIPMENTS of Mountain Lion in the keynote?  It's at 16:20 if anyone wants to go look.  I take it that most of those copies weren't sales. /s


     


    Here, let me spare you the effort:


     



     


    Additionally, there are many manufacturers you can pick on for a lack of updates, but Samsung shouldn't be one of them.  Even the Galaxy S2 is running Jellybean.


     


    Finally, I think it's fair to say that Samsung copied aspects of iOS early on, but it's laughable to say that they would have to copy iOS 7 (unless you're only talking about the appearance of it) since Apple borrowed so much from Android in its update.

  • Reply 8 of 137
    zeromeuszeromeus Posts: 181member


    Apple's definition of SHIPPED means SOLD.  Apple SOLD 28 million copies of Mountain Lion because in order for Mountain Lion to be SHIPPED, it has to be purchased through the Mac App store.  Physical copies of Mountain Lion wasn't available to anyone except maybe institutions who needed the physical media to upgrade their systems through volume licensing.  In any case, Apple didn't ship 28 million copies to sit on shelves.  They actually "shipped" their Mountain Lion through their app store.


     


    Take some notes and learn your fact before you start talking non-sense. 


    Quote:

    Originally Posted by wakefinance View Post


    I was hoping for evidence that Samsung didn't actually sell the 10 million phones in the first month, but there was none.  Calling shipments anything but sales only rings true when the shipments have to be returned.  There is no evidence of that whatsoever.


     


    Speaking of shipped versus sold, did anyone else notice that Tim Cook announced SHIPMENTS of Mountain Lion in the keynote?  It's at 16:20 if anyone wants to go look.  I take it that most of those copies weren't sales.  Here, let me spare you the effort:


     



     


    Additionally, there are many manufacturers you can pick on for a lack of updates, but Samsung shouldn't be one of them.  Even the Galaxy S2 is running Jellybean.


     


    Finally, I think it's fair to say that Samsung copied aspects of iOS early on, but it's laughable to say that they would have to copy iOS 7 (unless you're only talking about the appearance of it) since Apple borrowed so much from Android in its update.


  • Reply 9 of 137

    Quote:

    Originally Posted by zeromeus View Post


    Apple's definition of SHIPPED means SOLD.  Apple SOLD 28 million copies of Mountain Lion because in order for Mountain Lion to be SHIPPED, it has to be purchased through the Mac App store.  Physical copies of Mountain Lion wasn't available to anyone except maybe institutions who needed the physical media to upgrade their systems through volume licensing.  In any case, Apple didn't ship 28 million copies to sit on shelves.  They actually "shipped" their Mountain Lion through their app store.


     


    Take some notes and learn your fact before you start talking non-sense. 



     


    I don't need to learn any facts.  What I'm pointing out is that SHIPPED DOES MEAN SOLD unless returns are made.

  • Reply 10 of 137
    zintharzinthar Posts: 20member

    Quote:

    Originally Posted by Corrections View Post


    It was also "worrying news for Apple" when it was left the only vendor selling a $400 10GB hard drive MP3 player in quantity and there were all these flash memory MP3 player options available for significantly less. Lots of worrying.


     


    And then when Apple took over the flash memory MP3 market there was lots of worrying that all these smartphones that were getting popular were able to play MP3s, and what would Apple do after people stopped needing an iPod? Lots of worrying. 


     


    And then when netbooks started getting the headlines, there was lots of worrying that Apple's Mac lineup needed a netbook version or all these $200 netbooks running Linux or Windows 7 would destroy the market for full priced, high end devices. Lots of worrying.


     


    Lots of worrying. You're not alone, don't worry. There's lots of worrying out there.



     


    Worrying wasn't exactly the word I meant to use.  I'm not saying that Apple has to worry all that much about Android and Windows phone competition, but from cannibalizing its own sales with cheaper products that much of the market deems 'good enough'.  When Apple's iPhone 5 sales came in below expectations, at the same time overall iPhone sales met them -- consumers were opting for the 4 & 4S instead in larger numbers than expected.


     


    Likewise, underperforming S4 sales may not be the whole story -- it's possible that many consumers are simply opting for the price-reduced S3.  

  • Reply 11 of 137

    Quote:

    Originally Posted by wakefinance View Post


    Speaking of shipped versus sold, did anyone else notice that Tim Cook announced SHIPMENTS of Mountain Lion in the keynote?  It's at 16:20 if anyone wants to go look.  I take it that most of those copies weren't sales. /s


     


    Additionally, there are many manufacturers you can pick on for a lack of updates, but Samsung shouldn't be one of them.  Even the Galaxy S2 is running Jellybean.


     


    Finally, I think it's fair to say that Samsung copied aspects of iOS early on, but it's laughable to say that they would have to copy iOS 7 (unless you're only talking about the appearance of it) since Apple borrowed so much from Android in its update.



     


    Dude, it's me!


     


    I mean, it's you!


     


    I've travelled back in time!


     


    I've come from the future to warn you about mistakes we make in the past.


     


    Stop typing immediately!


     


    You seriously don't want to know how well Apple does in the future. Everything you type makes us look like an clueless ass...I mean, more of a clueless ass than what was normal for us.


     


    Time proves everything we say wrong, and I mean, EVERYTHING.


     


    Cease posting immediately!


     


    Remember what I said.


     


    Now stand back!


     


    When I return to the future I don't want you to get caught in the effect radius of my...


     


  • Reply 12 of 137
    wakefinance wrote

    "Additionally, there are many manufacturers you can pick on for a lack of updates, but Samsung shouldn't be one of them. Even the Galaxy S2 is running Jellybean."

    So why is my GT-S7500 still waiting for an update to Jellybean? This is a phone I bought new 5 months ago and it seems Samsung have abandoned it, they will not commit to releasing it or providing a date.

    With my iOS phones (I'm a developer) I'm going to be getting an iOS7 update for my iPhone 4 the day its released, and I already have iOS 7 beta running on my 4S which is a phone introduced more than 2 years ago.

    AND... there is little difference between shipments and sales of Mountain Lion because it is not 'shipped' in a box and is downloaded, returns numbers are going to be near zero because few if any people decided to downgrade an OS once installed.

  • Reply 13 of 137
    correctionscorrections Posts: 1,363member

    Quote:

    Originally Posted by wakefinance View Post


     


    I don't need to learn any facts.  What I'm pointing out is that SHIPPED DOES MEAN SOLD unless returns are made.



     


    You got schooled, bro. 


     


    You actually thought Apple shipped digital $29 copies of OS X ML "into the channel"? And you were all stoked you found that too, huh? Or was it on the same Droid Living Magazine that told you iOS 7 got all sorts of ideas from Android, a hobbyist platform that can't support real commercial app development. They sure have a lot of glossy magazines in the super market tho, telling you all about how to customize your home screen in really cool ways. 


     


    Also, go find a Google search bar and type "stuffing the channel" into it and start reading what comes up. 

  • Reply 14 of 137
    matrix07matrix07 Posts: 1,993member

    Quote:

    Originally Posted by wakefinance View Post


    Speaking of shipped versus sold, did anyone else notice that Tim Cook announced SHIPMENTS of Mountain Lion in the keynote?  It's at 16:20 if anyone wants to go look.  I take it that most of those copies weren't sales. /s


     


    Here, let me spare you the effort:


     



     



    So when Apple said it's shipped, it's shipped. When Apple said it's sold like iPhones sold, it's sold. Isn't that what we said all along? Thanks for a confirmation. It's great that we can put to rest the spin people tried to make iPhone selling number into shipment lately. Again, thank you.


    Btw, ML was only sold electronically, so it's shipped when people downloaded it. And how can they download it if they didn't buy it form the App Store?


  • Reply 15 of 137

    Quote:

    Originally Posted by Corrections View Post


     


    You got schooled, bro. 


     


    You actually thought Apple shipped digital $29 copies of OS X ML "into the channel"? And you were all stoked you found that too, huh? Or was it on the same Droid Living Magazine that told you iOS 7 got all sorts of ideas from Android, a hobbyist platform that can't support real commercial app development. They sure have a lot of glossy magazines in the super market tho, telling you all about how to customize your home screen in really cool ways. 


     


    Also, go find a Google search bar and type "stuffing the channel" into it and start reading what comes up. 



     


    No, DED, I am well aware that Mountain Lion was only sold as a digital copy.  That's how I got my upgrade and why I advised my mom not to worry about her MBA lacking a CD drive.  My point was sarcastic.  Shipped means sold.


     


    The hobbyist platform thing was absurd the first time you used it and still is.  The only hobbyists developing it are the devs making custom ROMs.  Anyway, as far as iOS taking ideas from Android and Windows, it absolutely did.  I hate to use the word "stealing" because that implies malicious intent, and I don't think that using others' ideas as a stepping stone to something of your own is malicious.  Rather it's a necessary part of progress.  These are some articles you might want to reference with regards to Apple's stepping stones:


     


    http://www.infoworld.com/d/consumerization-of-it/yes-ios-7-copies-windows-phone-and-android-get-used-it-220644


     


    http://www.slate.com/articles/technology/technology/2013/06/apple_ios_7_will_borrowing_ideas_from_microsoft_help_apple_destroy_the_smartphone.html


     


    http://www.eweek.com/mobile/apples-ios-7-buys-time-with-ideas-borrowed-from-other-mobile-platforms/


     


    http://www.forbes.com/sites/ewanspence/2013/06/11/an-open-letter-from-android-to-ios-7/


     


    http://www.droid-life.com/2013/06/10/ios7-vs-android-a-quick-comparison-after-the-wwdc-keynote/

  • Reply 16 of 137

    Quote:

    Originally Posted by realpaulfreeman View Post



    wakefinance wrote



    "Additionally, there are many manufacturers you can pick on for a lack of updates, but Samsung shouldn't be one of them. Even the Galaxy S2 is running Jellybean."



    So why is my GT-S7500 still waiting for an update to Jellybean? This is a phone I bought new 5 months ago and it seems Samsung have abandoned it, they will not commit to releasing it or providing a date.



    With my iOS phones (I'm a developer) I'm going to be getting an iOS7 update for my iPhone 4 the day its released, and I already have iOS 7 beta running on my 4S which is a phone introduced more than 2 years ago.



    AND... there is little difference between shipments and sales of Mountain Lion because it is not 'shipped' in a box and is downloaded, returns numbers are going to be near zero because few if any people decided to downgrade an OS once installed.

     


     


    I didn't say all of their phones got the update.  Maybe buy a high end model next time?  I don't know what else to tell you.


     


    How many features of iOS 7 are missing on your 4?

  • Reply 17 of 137

    Quote:

    Originally Posted by matrix07 View Post


    So when Apple said it's shipped, it's shipped. When Apple said it's sold like iPhones sold, it's sold. Isn't that what we said all along? Thanks for a confirmation. It's great that we can put to rest the spin people tried to make iPhone selling number into shipment lately. Again, thank you.


    Btw, ML was only sold electronically, so it's shipped when people downloaded it. And how can they download it if they didn't buy it form the App Store?




     


    Jesus, there was a /s after that sentence.  It was sarcastic.  Shipped equals sold for any company any time anywhere.  Shipped only means something different when returns are made.

  • Reply 18 of 137
    matrix07matrix07 Posts: 1,993member

    Quote:

    Originally Posted by wakefinance View Post


     


    Jesus, there was a /s after that sentence.  It was sarcastic.  Shipped equals sold for any company any time anywhere.  Shipped only means something different when returns are made.



    I couldn't see how the picture you attached show that. It clearly said "Shipped.", so it's very straight forward. When Apple said "sold" it's sold. When Apple said "shipped" it's shipped. Case's closed.


    Hope nobody spin this no more.


  • Reply 19 of 137
    iroebuciroebuc Posts: 5member
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  • Reply 20 of 137
    mhiklmhikl Posts: 471member

    Quote:

    Originally Posted by Zinthar View Post



    This is actually worrying news for Apple as well, IMO.


    Nobody cares about your humble opinion, troll. 


    Fortunately, AI has the blocking feature so your spiel can be kept from contaminating screens. 


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