The time to strike is when an enemy is at its weakest. That might be a simple piece of strategic advice, but one that I hope Samsung takes to heart over the next few months. Following critical success for the Galaxy S7 and S7 Edge, and strong indications that the mobile division has started to turn its finances, Samsung is on a roll. Momentum is building, sales of the S7 family should be at their peak in the current quarter, and the Galaxy Note 6 is getting ready to rule over the next quarter.
More importantly, Samsung's ascendancy is kicking in just as Apple hits one of its roughest patches of the decade.
This week's quarterly numbers out of Cupertino have holed the unsinkable Apple on the waterline. iPhone sales in the first calendar quarter were down ten million devices year-on-year and barely met expectations, revenue dropped thirteen percent year-on-year, and forecast revenue for Apple's third quarter is $41-$43 billion - well below the analysts target of $47 billion. Forbes' Miguel Helft has more on the earnings call.
While the raw numbers are a concern, the bigger risk for Apple is the damage to the perception of the iPhone brand and Apple's understanding of where the smartphone market is trending. The move to larger screened devices ignored a product cycle of iPhone 5, 5C and 5S users refusing to upgrade - and now the four-inch iPhone SE has arrived it's cannibalizing sales of the larger and more expensive devices in the portfolio. The slam-dunk market of an iPhone Battery Case resulted in the ugliest product out of Cupertino in many years. The recent spate of iOS updates have been far buggier than previous years.
And if the next major iteration of technology in the iPhone will not be featured on a handset until 2017, then you can forget about selling an iPhone on the strength of innovation or cutting edge hardware.
Every product line has a black mark against it in the media, and these are harder for the public to ignore. The Apple Watch may be the biggest selling wearable out there, but it's being portrayed as a failure in the media. The iPad Pro has not captured the imagination or redefined portable computing. The laptop updates simply keep the specs of the MacBook and MacBook Air up to date while Microsoft's Surface Book takes the prize for out of the box thinking.
In short, Apple is no longer the Imperial Lord that can do no wrong in the market. It can make mistakes and do the wrong thing - with sales dropping the simple argument is that it has done the wrong thing. Sales are dropping. Revenue is dropping. Targets are being missed. Cook can talk about overhangs, macroeconomic environments, and how Apple will grow again when the market grows, but the simple view is that Apple is failing.
Next page: It's not just about the financial numbers...
A closer examination of the numbers revealed this isn't the case, as Forbes' Mark Rogowsky notes:
This wasn’t Apple’s worst quarter in 13 years; it has out-earned fiscal Q2 2016 exactly six times in its history. The 51.2 million iPhones the company sold last quarter is the fourth highest total ever posted, bested only by the past two holiday periods and the January-March interval last year when the iPhone 6 and 6 Plus were still fairly new.
But the game isn't always about reality, it's about perception.
Apple is perceived as being 'in a bad place' just as Samsung is perceived as reaching 'a good place.'
It has a new handset range that is delivering on critical and commercial fronts; it has exciting and highly anticipated products for the rest of the year; and it can offer new technology that users want today, as opposed to Apple's plan to strip out vital hardware elements such as the headphone jack.
Of course Apple will post higher numbers, will have a larger share of the high-end market, and deliver far more profit than the South Korean company during the year. The benefits to Samsung pushing hard against Apple are clear. It has an opportunity to stabilise its mobile division, it can build on the success already achieved in 2016, and it can create a new dawn for the Galaxy platform that will deliver over the next few years.
Samsung had already started that plan, but a weakened Apple makes the job easier, the goals a little more achievable, and it means Samsung can stop being reactive to Apple and redefine what it means to be a smartphone to match its own vision.
