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Will an Early Galaxy Note Launch Give Samsung an Edge over Apple?

Puneet Sikka

Apple Likely to Phone In Another Winner with 3Q15 Earnings

(Continued from Prior Part)

Samsung continues to lose share in the worldwide smartphone market

Samsung (SSNLF) continues to struggle in the smartphone market, especially since Apple (AAPL) released its iPhone 6 and iPhone 6 Plus in September of last year. According to a report from the IDC (International Data Corporation), and as the chart below shows, Samsung’s share of the worldwide smartphone market fell from 30.7% in 1Q14 to 24.6% in 1Q15. Meanwhile, Apple has managed to increase its share from 15.2% to 18.3%. Lenovo’s (LNVGY) share, in contrast, also fell.

Samsung now plans to launch Galaxy Note earlier than expected

On top of the fierce competition it faces in the smartphone market, Samsung got the demand for its new smartphones all wrong. According to a report from the Wall Street Journal, citing people familiar with the matter, Samsung predicted that the demand for its Galaxy S6 smartphones would be four times that of its Galaxy S6 Edge smartphones. But the actual demand was more or less the same for both devices.

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This led to an excess inventory of Galaxy S6 smartphones while Galaxy S6 Edge smartphones were in short supply. This miscalculation led to Samsung announcing in its pre-earnings guidance that its operating profit for 2Q15 would likely decline by 4% on a year-over-year basis. BlackBerry’s (BBRY) investors experienced a similar setback a few days ago when the company announced a net loss in its latest quarterly earnings. For more on this, read BlackBerry 1Q16 Revenues Disappoint Investors .

Samsung now plans to launch the next version of Galaxy Note smartphones in August this year, earlier than the usual September launch. According to a report from the Wall Street Journal, citing people familiar with the matter, Samsung’s strategy is to avoid direct competition with Apple and its next release—the iPhone 6S.

For diversified exposure to Apple, you could invest in the PowerShares QQQ Trust, Series 1 (QQQ). QQQ invests about 14.3% of its holdings in Apple.

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