Galaxy S6 – can it change the course of Samsung?

Samsung showcased the new Galaxy S6 at MWC in March 2015. Samsung has implemented almost all that consumers have been asking Samsung a long time for and more. It has added a unique feature only Samsung can pull-off at the moment – the curved edge display. We expect this will be the most successful Galaxy S model Samsung has launched so far, surpassing even the Galaxy S4.
Galaxy S6

The biggest change in the Galaxy S6 is the design and this applies to both the mechanical design and UI design. Samsung has finally made a change and this applied to their attitude which is actually more significant than it may seem. But the real winner is the Galaxy S 6 Edge which is a one-of-a-kind product.

The Note Edge had the first curved P-OLED (plastic OLED) display but the implementation was poor and clumsy. Samsung has found a new way to make the experience with the curved display intriguing and enjoyable.

The lead that Samsung makes with the Galaxy S6 and S6 Edge is likely to continue across several quarters. So we project that Samsung will sell more than 50 million units of the Galaxy S6 and S6 Edge combined this year (sell-through terms). This is more than the previous bestseller Galaxy S4 which sold around 45 million in its first year. We believe the metal casing and curved display will be even difficult for Samsung and it will cause a delay in the first initial shipments of the Galaxy S6 Edge. With such constraints cleared we believe the Galaxy S6 and Edge can exceed 55 million units this year.

[Comparison of Galaxy S 4, 5 and 6 sales in the initial 9 months after launch]

Galaxy S6 S5 S4

Galaxy S 6 and its Edge variation will take more share from other Android competitors rather than Apple. With the large screen iPhone, Apple has successfully retained its user base and also recaptured most of the previous iOS users who had defected to Android in pursuit of a larger screen experience.
Consumer behavior has changed over the last 2 years. They are more cautious and prudent in their spending and making plans ahead of big purchases rather than spontaneous impulse-based behavior. The iPhone 6 and 6 Plus had absorbed most of the budgets of the premium users and the cycle is not going to be broken for the next 24 months for these users. So the expected churn from iPhone users will not be large as consumers are working out of a more limited ‘digital budget’.

We’ve illustrated how the share in the $400+ premium market has changed and how it will probably change this year.

[Projected market share change in the $400+ premium market]

Premium market share shift projections 2015
The Galaxy S6 Edge will offer Samsung the ‘edge’ it needs to win back share in the premium segment and it will provide protection from the ‘Me too’ brands in Android for at least 6 months. It will also set a trend in the industry of metal unibody design and flexible OLED displays this year. Without a curved display it will be hard to gain any share in the premium market of the Android universe and without metal casing it will be difficult to gain share in the mid-tier market of Android in 2015.

We also believe that the market is ripe for consolidation. The local brands are proliferating and it is almost a jungle out there. Smaller brands are very vulnerable and there is very little profit being made. In most cases this is when consolidation strikes in. Amazon dominated the online market place at one point as did Qualcomm in the 3G baseband market. Usually it’s the No. 1 player that plays this role but we are not clear if Samsung is even interested in such a strategy.

The time for consolidation has come and if Samsung does not emerge as the consolidator someone else will. Huawei and Xiaomi are the most likely (after Samsung). LG and Lenovo also have a chance if they change their brand, product strategy this year.

written by Tom Kang

Above is a quick summary of our 6 page report on the Galaxy S6. To read the full report please click the link below (registration required for first time users). Or just drop an email to [email protected] and we’ll send it out to you in no time!