As Apple (AAPL) shares continue to hit new highs above a trillion-dollar valuation after delivering another impressive set of quarterly results, investors are eagerly anticipating the company’s usual September smartphone refresh. With expectations for three new high-end devices swirling, Apple’s biggest competitor just released its latest salvo in the smartphone war.
(Source: cnet article, seen here)
On Thursday, Samsung (OTC:SSNLF) unveiled the Galaxy Note 9, which is available for pre-order in the US starting Friday and in stores two weeks later. As detailed in the cnet article linked above, the upgraded model features the usual processor and software upgrades, a slightly larger display, and some fingerprint reader/speaker improvements such as those seen in the Galaxy S9 line. Samsung also went with a much bigger battery, 4,000 mAh, compared to the 3,300 mAh version in the previous model, so battery life should be a bit better.
Perhaps the thing that caught my attention most was price, where the entry level 128 GB storage / 6 GB RAM (memory) starts at $1,000 in the US, where a more expensive version costs you $1,250 for 512 GB and 8 GB, respectively. However, those who pre-order the Note 9 get to choose between the following items, which technically brings down the consumer’s “price” a bit.
- The Fortnite Galaxy skin with 15,000 V bucks (worth $150)
- A pair of AKG N60 over-ear, noise-canceling headphones (worth $299)
- Or both for $99 (worth $449 total)
Behind hitting the four-digit price tag even for the base model, the interesting item is the larger storage version with 512 GB. It’s a strange decision for Samsung given the phone features expandable storage, something not seen on iPhones, but it’s a way to boost selling prices and potentially margins. Going to higher storage models is one item I thought we could possibly see from Apple this year if Apple was interested in further boosting its iPhone average selling prices.
Beyond a better battery that I’m hoping Apple goes for this year, I’m also curious to see if the technology giant challenges Samsung’s S-Pen. While Apple is increasing the amount of iPads compatible with the Pencil, bringing the $99 Pencil to the iPhone could be a game changer for Apple’s “other products” category. If just 5% of iPhone buyers a year purchased a pencil, that’s more than a billion in extra revenue per year for Apple, not counting any additional iPad or iPhone sales from those who could use the Pencil on multiple devices.
Since the current expectation is for Apple’s highest-end OLED device to have an even larger screen than the Note 9, perhaps Apple could have a $1,299 or even higher price for a 512 GB storage version. Of course, the size of the display may depend on the size of the notch needed to run Face ID, and rumors are suggesting that Google’s (GOOG) (GOOGL) Pixel 3 smartphone to be launched this fall will have a huge notch as well.
The Galaxy Note 9 comes at a time where Samsung is looking to rebound in terms of market share. IDC’s Q2 2018 report showed Samsung showing a 10% plus decline in unit sales for the quarter over the prior year period, while Apple edged up about 0.7%. The most important item however is that Apple continues to dominate the $600 and up space as seen below, with one analyst estimating Apple could have more than a 90% share next year.
(Source: Philip Elmer-Dewitt article, seen here)
With Apple just about a month or so away from the expected unveiling of its newest smartphones, we got a glimpse today at Samsung’s latest challenger. Along with the usual yearly upgrades, the Note 9 features a much bigger battery along with a 512 GB storage tier and a high starting price. Perhaps this could give us a clue as to what Apple is thinking for its devices, but it remains to be seen if Samsung can start to take away some of Apple’s dominance at the high end of the smartphone space.
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