Apple vs Samsung: The race continues….

It was all about Apple until few months back. Samsung seemed to have lost the race against the US tech titan in the smartphone segment. But seems like tables have turned.

South Korean giant registered a surprisingly upbeat financial update on Thursday after not so good show last year thanks in part to stronger competition from Apple. Now the South Korean electronics giant says it will report its best operating profit in two years (about $7 billion) in late July, putting it ahead of the already-positive forecasts from financial analysts, who are expected earnings of approximately $6.8 billion.

Though the breakdown of revenue will happen only after official results later in the month, smartphone sales are almost certainly driving those profits, in particular, sales of the well-regarded Galaxy S7 and S7 Edge. Samsung’s bet that consumers are getting excited about virtual reality, by bundling its Gear VR headset with the phones’ pre-orders is definitely adding a cherry to the cake. “Samsung have been hyper aggressive with promotions,” says IBB Consulting’s senior analyst Jefferson Wang. Giving away the Gear VR might have hit profits in the short term, but “it helps drive sales long term and brings Samsung into an area that will hopefully be the next computing platform.” A recent poll by IBB showed that just 12 percent of U.S. consumers didn’t know what virtual reality was. That suggests a surprisingly high level of awareness of such new technology, adds Wang.

Apple woes, on the other hand aren’t just ready to take a breather; their first ever fall in the June quarter plus 26 percent slide in sales of the phone in China and apparently lagging behind those of Samsung’s Galaxy range too.

China has indeed become a big cause of worry for Apple with the government having blocked access to various web services like iTunes Movies in April, because of local regulatory violations. Soon after that last incident, billionaire investor Carl Icahn dumped all his Apple shares, saying he was concerned that the Chinese government could “make it very difficult for Apple to sell there.”

In fact Apple’s downturn is directly proportional to big push for national brands like Lenovo and, in particular, Huawei. So, is it the Apple’s China challenge that’s benefitting Samsung? The stocks, at least believe so. Samsung’s Seoul-listed shares are up 16 percent since the start of 2016, while Apple’s have fallen by 8 percent.

But there is another angle to this story too. Apple and Samsung’s big product launches happen at different times of the year, with Samsung traditionally launching its flagship device in March and Apple in September. That means by the time each one is doing a big launch, its rival’s sales of their last device are starting to slow. But, in the run up to September, Samsung is still riding on the momentum of its big Galaxy S7 launch in March, while it’s been nearly a year since Apple put out the iPhone 6. But will Apple deliver a punch this time too?

The massive success of the iPhone 6 was linked to its bigger screen, which appealed especially to consumers in China. “I don’t think at this point that there’s a second, huge innovation for them to follow on,” says Wang.
“It’s hard to say if iPhone 7> is going got be bland. Everyone is pretty excited with the latest iOS release at WWDC, so people from a software perspective are excited, but from a hardware perspective it might be difficult to say it’s going to blow the doors off.”

But then, this race isn’t over yet. Scale may be getting skewed towards Samsung presently but in this consumer driven market, anything is possible. In the end, it isn’t about the launch, it’s about what clicks with the consumers and for that keep watching.