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High-end smartphones signal business innovation

SINGAPORE – Samsung is due to launch its latest Galaxy smartphones on Thursday and these expensive devices are expected to generate revenue and margins, an analyst told CNBC.

The South Korean tech giant’s high-end flagship devices are ‘trophy’ products that signal to the industry as a whole what kind of innovation the company has in store for the rest of its product line, Bryan Ma, vice president of device research at International Data Company said.

Reports indicate that Samsung may announce three smartphones for the Galaxy S series: S21, S21 + and S21 Ultra to succeed the company’s S20 devices. The launch will air at 10 a.m. ET (11 p.m. HK / SIN) on the Samsung website.

“I think there is obviously some pressure in the midst of the pandemic, both on units and on average selling prices, but despite that, of course it’s still a flagship that has its place in the industry, ”Ma said Thursday. on CNBC’s “Squawk Box Asia”.

Typically, Samsung launches its flagship Galaxy devices in February or March, near or during the Mobile World Congress trade show.

Ma said one of the reasons Samsung moved the launch forward to January is to capitalize on Huawei’s ongoing struggles by launching a “product like this and seizing this opportunity as much as possible.”

Seize the market opportunity

As part of a broader trade fight between Washington and Beijing, US sanctions have crippled Huawei’s ability to do business. At one point last year, the Chinese company dethroned Samsung as the world’s largest smartphone maker, but that triumph was short-lived and its share of the smartphone market declined.

While Samsung took a slice of the market share last year, Chinese smartphone maker Xiaomi has stepped up efforts in places like Western Europe to fill the void Huawei has left with aggressive promotions and marketing efforts. visibility.

One of the big things Samsung is betting on are foldables, which most of the rest of the industry doesn’t quite have yet. And Samsung is already in its second generation, now switching to third generation products.

This is also probably another reason why Samsung probably brought forward its launch event, according to Ma. “As much as Xiaomi is known to have low-end products, they also say,” Look at this Mi 11 flagship phone with this device. outstanding photo, “and all that sort of thing. That’s where Samsung comes in basically just go on stage and say, ‘Look, this is what we have here too,'” he said.

The maturity of the smartphone industry limits the kind of innovation that companies like Samsung can tout for their next generation of devices. But the world’s largest smartphone maker is advancing in an area where the rest of the industry continues to catch up.

Bet on foldable smartphones

“Remember, one of the big things Samsung is betting on are foldables, which most other parts of the industry don’t quite have yet. And Samsung is already in its second. generation, now switching to third generation products, ”said Ma mentioned. He added that he expects a new foldable device to likely be announced in the second half of 2021.

Samsung president and head of mobile communications TM Roh said in a blog post last year that the company would expand its portfolio of foldable smartphones, making these devices “more accessible to everyone.” This could potentially signal foldable smartphones with a lower price point than what Samsung currently has on the market.

Still, the smartphone’s launch on Thursday is unlikely to move Samsung’s share price much. Indeed, the company’s main profit driver is its lucrative semiconductor business which sells memory chips used in smartphones, laptops and data centers.

“Nevertheless, this division of Samsung-branded products, especially still on these high-end products, is still very profitable for them and should continue to operate in this direction,” said Ma, referring to the IT and mobile communications business. from Samsung.