Beyond the Galaxy S4 hype: What now, Samsung?

It's getting harder to make new products drastically better than their predecessors. Just ask Apple.

The Samsung Galaxy S4 Sarah Tew/CNET
Is it too much to expect huge changes with each new phone generation? Judging by the iPhone 5 and Galaxy S4, the answer is yes.

Galaxy S4 details have only been live for about an hour, but reviews (including CNET's take) are already rolling in. The overall verdict seems to be that the phone is more evolutionary than revolutionary. The hardware design has been updated with the latest and greatest but doesn't look too different. Other features are pretty cool, but it's unclear how useful they'll be.

The questions these early reactions subtly bring up is how much Samsung can keep raising the bar, and whether we all expect too much innovation in each new generation of smartphones. Of course, the S4 isn't even in the hands of users yet, but in the world of tech, it's never too early to look ahead. For Samsung, it's vital to do so.

"The rate of innovation was so quick in the last five years that everybody is coming up against this battle of diminishing returns," IHS iSuppli analyst Wayne Lam said. "What are you going to do for me next? How are you going to wow me after you've wowed me so much and inserted all the innovations you can?"

The handset market is very fickle. Look at how quickly BlackBerry, Nokia, Motorola, and HTC have fallen out of favor with buyers. They dropped the ball early on in the smartphone market, which is a mistake that could put some of them out of business. While those companies recently have built great phones, people still aren't buying them. Jefferies analyst Peter Misek earlier this week surmised in a note to investors that Apple could follow the same fate if it doesn't hurry up and innovate.

No one is suggesting that Samsung is in the same position as some of its weaker rivals (and CNET doesn't think Apple is in that position either), but it is something the company must be conscious of. Having one misstep won't bankrupt Samsung, but it could have longer-term effects on its prospects in the key handset market.

The Galaxy S4 is probably the most-hyped product Samsung has ever released, and it overall is a good phone. The device looks a lot like the Galaxy S3, but Samsung updated the components and camera and added a bigger screen. And the software updates really stand out. But will that be enough? And do we really need all those features, which sometimes just seem gimmicky? Also, if users are able to get many of those software features on the Galaxy S3, as Samsung told CNET is the case, what pushes them to buy the S4?

Of vital importance
How critical is this phone to Samsung? In a word: Extremely.

Sure, Samsung doesn't sell just one new phone each year like its rival in Cupertino. Sure, Samsung's Note line of oversize smartphones, also known as phablets, is doing well. Sure, Samsung also makes tablets and televisions and refrigerators, not to mention a lot of the components used in those products.

But as broad at its business is, there's a lot riding on the Galaxy S4. For handset vendors, it's the high-end phone that makes a company's name and reputation. It's what gets people talking and gives them something to aspire to.

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It's the device a company can hold up to say -- "This is how innovative we can be. So if you like this, try our other products." It's also where most of the profits come from, not the lower-end, mass market phones.

"It's very important for Samsung to get this right," Current Analysis analyst Avi Greengart said. "They're hoping to build on the Galaxy S3, not coast or revert."

As CNET has noted before, there's an increasing worry that Apple and Samsung's most innovative days are behind them, and that the top two players in the industry are finally succumbing to the competitive pressures and harsh business environment that have punished the rest of the field. Both recently reported record-breaking quarterly results, but it wasn't enough to please the market.

It's hard to tell this by reading the tech press and analyst notes, but the iPhone 5 hasn't been a huge flop. It largely has received positive reviews, and it continues to sell well. According to Strategy Analytics, the iPhone 5 surpassed the Galaxy S3 to become the world's best-selling smartphone in the fourth quarter of 2012. But the company has still been criticized for the device, and ever since the launch, there have been concerns Apple is losing its edge.

Where Apple went wrong with the iPhone 5 (at least according to the tech crowd) is it didn't really add anything drastically different to the device or really update the operating system. It's tough to argue that Samsung didn't include enough new features in the Galaxy S4 (there are more items there than consumers could ever possibly use), but the phone itself isn't doesn't look that different from the S3. It's not hard to imagine a time when people begin to question its ability to innovate -- they're already doing that with Apple.

Samsung isn't doomed if the Galaxy S4 isn't well received by tech enthusiasts. On the contrary, it will likely sell well either way. But the impression that Samsung's innovation train is slowing down may represent the first crack that could widen with subsequent generations of Galaxy S phones. People may buy the Galaxy S4 but not come back for the S5 or S6.

"Samsung should be able to maintain its momentum this time around," Ovum analyst Tony Cripps said. "Next year or the year after will be when the real test comes."

Looking to the future
Samsung has prided itself on becoming one of the most innovative companies in the tech industry, but it's pretty easy to surrender that mantle. Apple's iPhone lost CNET's title of best device of 2012 to the Galaxy SIII . If the Galaxy S4 doesn't seem like a big step forward when all is said and done, that means Samsung could lose some of its oomph.

It could risk damaging the brand it has worked so hard to build. And those other products Samsung wants you to buy? Well, you might think twice if the Galaxy S4 isn't quite up to snuff. The halo effect could be pretty broad.

A tiny IR blaster on top turns your GS4 into a remore to control your TV. Sarah Tew/CNET
A disappointing S4 launch also could open the door to share gains by rivals. LG has been touting the benefits of its own devices in the past couple days, and it also put up big billboards in New York City's Times Square, right next to those by Samsung.

And Apple's marketing chief, Phil Schiller, yesterday went on the defensive against Android, downplaying the expected competition from the Galaxy S4 and saying Android products are inferior to the iPhone.

These concerns about Samsung may turn out to be a lot of worry about nothing. The company may completely blow people away with the Galaxy S4 and its following products, and it may significantly ratchet up the pressure against Apple and other Android rivals. So far, the device appears pretty impressive, and people often buy phones because of the buzz around the product. There's no shortage of that here.

However, it's also important for Samsung to remain aggressive and not get too comfortable with its position on top. It may wow the market this time around, but the bar will be higher for future devices.

As Gregory Lee, CEO of Samsung's Southeast Asia, Oceania, and Taiwan operations, told CNET today, Samsung will keep adding the best-possible hardware, such as displays and chips, to its products, as well as continue including new features like advanced software capabilities. And it won't forget it can lose its position if it misses a beat.

"In this business, you have to stay humble," he said. "The technology business is a big business. If you get arrogant, you can have downfalls."

Let's see what you come up with next, Samsung. We can't wait.

 

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