Galaxy S5: More than just another phone to Samsung

There's a lot riding on Samsung's Galaxy S5, and it goes beyond having the most coveted smartphone in the market.

The Galaxy S5, which will make its debut on Monday at Samsung's "Unpacked 2014 Episode 1" event at Mobile World Congress, serves as a potentially critical turning point for the Korean electronics giant. After a lackluster response to the Galaxy S4, Samsung's impending new flagship phone could indicate whether the company still has "it," and ultimately determine whether the company cements its position as king of the hill -- or starts to lose its grip as the world's largest phone vendor.

The Galaxy S5 will hopefully answer a few nagging questions: Is Samsung truly an innovator when it comes to hardware? Is there room for anyone to truly innovate beyond the standard rectangular slab? Will Samsung showcase its own software or will the new phone go for a purer Android experience, deferring back to partner Google? Most importantly, will the Galaxy S5 represent a major step ahead of Apple's iPhone 5S and get consumers shopping for high-end phones again?

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Part of the problem -- and Apple can surely sympathize -- is the mounting expectations and rumors circulating around the Galaxy S5. Will the phone actually be able to impress and surprise? Probably not, but it's increasingly hard for any company to do so with the sheer amount of noise and static that pops up ahead of an official unveiling.

In all likelihood, Samsung will incorporate some innovative features but hold back on countless others. Shoppers looking for the science fiction-like smartphone of the future likely won't find it in the Galaxy S5. The question, then, is just what features on the Galaxy S5 will get users to upgrade their phones or even cause people to move away from Android rivals or the iPhone.

Because there's no way to deny that the smartphone market is maturing. High-end demand isn't growing as fast as it used to, and many new smartphone buyers today are opting for cheaper phones. Even Samsung, the undisputed leader in mobile phone sales, is feeling pressure. The company last month reported its first quarterly operating profit decline in two years, largely because of a slowdown in its mobile business. In the fourth quarter, its operating profit in IT and mobile communications dropped 18 percent from the third quarter as shipments fell "slightly."

"The challenge is, how do you get people to upgrade every two to three years, especially when carriers are aggressively shifting to installment models for phones," Jackdaw Research principal analyst Jan Dawson said. "There's an incentive not to upgrade because you can end up spending less on service plans."

The Galaxy S3, which launched in early 2012, proved to be a blockbuster phone for Samsung. That device helped the company take over the mobile-phone market and made the Galaxy brand as well-known as the iPhone. But Samsung's follow-up device from last year, the Galaxy S4, hasn't done quite as well.

No one really knows how many Galaxy S4 devices the company has sold, but market watchers have deemed sales a disappointment. Rather than buying the pricey new phone, many customers are purchasing the older, cheaper Galaxy S3. The two devices look nearly identical, and the only noticeable additions in the S4 -- the software and apps -- haven't been enough to tempt buyers.

"The S4 has proven [Samsung's] focus more on the software side didn't pay off as much," Kantar Worldpanel analyst Carolina Milanesi said.

Software has never been Samsung's strong suit. Its TouchWiz user interface, which is the software layered on top of Android, is reviled by many Android purists who want a less cluttered design. When the Galaxy S4 launched, some critics slammed the amount of "bloatware," or preinstalled and unremovable programs such as S Translate and S Voice.

If recent reports are correct, Samsung may get closer to stock Android on its devices. However, it's highly unlikely to stop pushing its own software and services, even if it hasn't quite figured out the right formula. In hardware, Samsung excels. In software, it's learning.

Even with Samsung's software push, hardware may matter more this time around. A smartphone's design and hardware, not a new software feature, typically are what get users to upgrade their devices. Samsung has always been on the forefront of hardware advancements, and it will have to do something major to grab shoppers' attention.

But it's getting harder and harder for companies to differentiate their devices using hardware alone. For Apple last time around, offering the iPhone 5S in gold and with a fingerprint sensor had to suffice. We'll see if similar hardware tweaks are enough for Samsung.

As for Samsung's rivals, the Galaxy S5 will mean even more pressure to release their own hits. Apple and Samsung continue to dominate the mobile market, and their lead over rivals has been expanding in many regions. If Samsung's new phone is as advanced as it has hinted, that could mean more troubles for LG, Sony, HTC, and all the other Android phone makers.

However, rivals are starting to gain some traction. LG has made good progress with its smartphone sales, particularly those under Google's Nexus brand, and Chinese vendors such as Lenovo are quickly rising. If the Galaxy S5 isn't a big bump over the S4, consumers may well start to look for alternatives.

One thing is certain -- the pressure is on for Samsung to deliver with the Galaxy S5.

See also: Behind Samsung's push to rule the world