Has Samsung gone too niche with its new GS4 smartphones?

<b>commentary</b> Samsung's new Galaxy S4 devices are geared toward niche markets, but they also force consumers to accept some compromises in terms of hardware specs. Will the strategy work?

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
6 min read
Samsung showed off its expanded line of Galaxy S4 smartphones at an event in London this week. Andrew Hoyle/CNET

Samsung has expanded its Galaxy S4 family of products to appeal to niche markets, but consumers will likely find trade-offs in certain specifications and functionality in these devices.

The company has been touting the expanded family of Galaxy S smartphones for a couple of months now. But earlier this week, at its event in London, Samsung specifically talked up the three new additions to its Galaxy S4 family of devices. The new devices are meant to address niche markets. But in tailoring the devices for specific audiences, Samsung has diluted some of the core specifications that make the Samsung Galaxy S4 one of the most advanced smartphones on the market.

The Galaxy S4 Zoom Sarah Tew/CBS Interactive

The Samsung Galaxy S4 Zoom is a camera first but also happens to be a smartphone. The device is designed to provide shutterbugs with a much improved camera that offers a 10x optical zoom. But when it comes to the phone part of the device, it's definitely no Samsung Galaxy S4. CNET UK's Andrew Hoyle, who took a look at the device at the London event, said "its 4.3-inch, 960×540-pixel display and 1.5GHz dual-core processor are much less impressive specs than the standard Galaxy S4."

The Samsung Galaxy S4 Active is designed as a rugged version of the Galaxy S4. It's water resistant up to a depth of 1 meter, according to the company, and it's also sand and dust-proof, suggesting it's a perfect device to take to the beach. And really it's one of the more advanced and high-end smartphones in this rugged category. But is it really a GS4? Well, the name certainly indicates that it is, but some of the specs that make the Galaxy S4 a true high-end smartphone are missing in this device. For example, while the GS4 sports an impressive AMOLED display that produces really great colors, the GS4 Active has a less expensive LCD screen, which isn't as colorful and simply doesn't look as vibrant as AMOLED. The camera has also been downgraded. Instead of a 13 megapixel camera, such as the one on the flagship GS4, the GS4 Active's camera is only 8 megapixels.

The Galaxy S4 Active Brian Bennett/CNET

The Samsung Galaxy S4 Mini is being called the little brother of the Galaxy S4. It's specifically meant to be smaller and less expensive than the Galaxy S4. And to be clear, it's not really targeted at the U.S. market. It's really meant to extend the GS4 brand to markets where phones are not generally subsidized by carriers. At any rate, it should come as little surprise that the specs on the GS4 Mini also don't match those of the bigger GS4. While it does sport a Super AMOLED display, it comes with a slower 1.7GHz dual-core processor, only 8GB of internal memory, and an 8-megapixel camera.

I am not at all suggesting that the specs on these phones are not good enough for many users. They certainly are. And many consumers might never notice the difference. But the fact is that while the phones sport the Samsung Galaxy S4 name, they may not be all that similar to the flagship Galaxy S4, which could confuse or disappoint some consumers.

The question then becomes if this might present a problem for Samsung in the future and possibly dilute the high-end brand it has spent years and millions of dollars building.

"Samsung has to maintain some core 'Galaxy S' attributes in each branded product," said Avi Greengart, a market research analyst with Current Analysis. "And Samsung has to continue investing in advertising for the flagship Galaxy S."

But Greengart said he isn't too worried Samsung will falter much here. And he seems to think the newly added devices in the Galaxy S family are good enough. Still, he warns that Samsung must still push hard in marketing the high-end Galaxy S4.

"As long as Samsung does that and makes a desirable flagship, I'm not that concerned about brand dilution," he said.

The Galaxy S4 Mini Sarah Tew/CBS Interactive

Samsung's marketing approach has long been to develop tons of products at different price points and throw them into the market to see what catches on. But with the Galaxy S series, the company seemed to take a cue from Apple.

Unlike Samsung and many other device makers, Apple has been very focused on selling one smartphone per year. And it takes a very one-size-fits-all approach. Customers looking for less-expensive devices can purchase last year's model, which is always discounted when a new version is introduced.

For the past few years, Samsung has fashioned its Galaxy S strategy to look more like Apple's approach. This isn't to say Samsung abandoned churning out plenty of other smartphones during this period. And in fact, it has also done well building another major high-end smartphone product brand, the Galaxy Note series.

But when it comes to the Galaxy S series of smartphones, consumers around the globe, and especially among the four major wireless operators in the U.S., have had access to a single flagship device. And like Apple, Samsung has introduced these flagship devices once a year: the Galaxy S, which launched in 2010; the Galaxy S2, which came out in 2011; the Galaxy S3, which debuted in 2012; and now the Galaxy S4, which was launched earlier this year.

Samsung has seen a good deal of success with this approach. And for the most part, it's handsets have been the biggest alternative to Apple's iPhone.

But now Samsung is expanding the brand and going after specific niche markets. This might make sense, given the increasing competition in the high-end smartphone market. But as I've described above, it will force consumers to make choices and even some compromises.

For instance, if you want a rugged phone, such as the Galaxy S4 Active, to meet your very active lifestyle, you won't be able to get the top-of-the-line specifications you'd get in the flagship Galaxy S4. The same is true of the Galaxy S4 Zoom. There is no question the camera is far superior to the flagship Galaxy S4's camera, and probably to many other smartphone cameras that rely on digital zoom instead of optical zoom. But a sacrifice must be made in terms of other aspects of the device.

Of course, the reason Samsung is likely skimping on some aspects of these niche market devices is because the advanced features included in the Active and Zoom raise the price of the device. And in order to compete with a bevy of new devices that are hitting the market now and in the coming months, Samsung must keep its costs down and appeal to a wider array of consumers.

In fact, analysts say Samsung will likely downgrade its sales forecast for the flagship Galaxy S4 for this quarter. Earlier this month, an analyst from JPMorgan said sales of the GS4 were "20-30 percent lower" than the firm had previously expected. And now there's talk that Samsung is going to cut production of the device and retire the previous model, the Samsung Galaxy S3, in order to not cannibalize sales of the flagship.

Right now it's hard to say whether the niche products with less advanced specifications will help Samsung or not as it competes with the mighty iPhone and other devices. The market is certainly different than it was a year ago, with competitors such as the HTC One, the new BlackBerry 10 devices, and Nokia's latest Windows Phone device all hitting the market in recent months.

Perhaps Samsung's approach is the right one to take: selling a device for every consumer. But there's a risk that these devices are just creating a noise in the market. And they could confuse consumers. It will be interesting to see what type of reception the spin-off Galaxy S4 smartphones get in the market.

Hands on with Samsung's splash-happy Galaxy S4 Active (pictures)

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