By Jonathan Cheng
BARCELONA-- Samsung Electronics Co. introduced a flagship
smartphone with a curved screen and mobile-payment system, seeking
to spark sales after a painful year that saw its leadership eroded
by Apple Inc. and Chinese upstarts like Xiaomi Corp.
The new Galaxy S6 and its double curved-screen variant the
Galaxy S6 Edge, released Sunday on the sidelines of an annual trade
show here, outlines Samsung's latest strategy for finding its
footing: take on Apple's iPhone head on, while bringing even more
of the manufacturing process under its control.
The new phone will be available globally starting April 10. In
the U.S., Samsung said it will be offered by all the major
carriers, including Verizon Wireless, AT&T, T-Mobile and
Sprint. ( Click to compare specs for the S6 and other
smartphones.)
The stakes are high for Samsung, which saw its previous flagship
smartphone, the Galaxy S5, fall flat with consumers. In the one
year since that launch, the smartphone market has become more
challenging for the South Korean tech giant. One the high end,
Apple's enlarged iPhones drove record sales and challenged
Samsung's dominance of premium large-screen smartphones. On the low
end, Chinese and Indian players released a raft of sleek handsets
priced at a fraction of comparable Samsung smartphones.
To reverse the damage, Samsung is releasing a new device that
directly rebuts many of the criticisms that dogged its predecessor.
In contrast to the mostly plastic Galaxy S5, the S6 will come
encased in a slim frame made of reinforced glass and aircraft-grade
aluminum.
Samsung also matched Apple's mobile payment service with one of
its own, dubbed Samsung Pay, and designed it to work with the
magnetic-stripe machines that are found at nine out of ten cash
registers in the U.S.
To address complaints that Samsung phones were bogged down with
little-used software, the company removed many of its apps and
streamlined the user interface.
Unlike Apple, Samsung also appears to be pinning more of its
software and services hopes on partners like Google Inc., Facebook
Inc. and Microsoft Corp., all of which will get prominent placement
on Galaxy S6 devices as Samsung pulls many of its own apps.
Perhaps most importantly for Samsung's attempts to reverse its
sliding profits is what's inside the device: application processors
developed entirely in house rather than chips from Qualcomm Inc.,
giving Samsung more control over almost all the components in its
handset.
The new smartphone is the product of a period of soul-searching
after a stretch of dominance that began in 2012 with the launch of
the Galaxy S III. At one point in 2013, Samsung outsold Apple by
nearly three times, while using its scale and marketing muscle to
sideline other rivals selling smartphones powered by Google's
Android operating system.
Company executives now acknowledge that they grew complacent by
the release of the Galaxy S5 last year, which they framed at the
time as a "back to basics" smartphone that deliberately eschewed
gimmickry in favor of a focus on improving everyday functions.
It landed with a thud. The warehouses of unsold smartphones
weighed on Samsung's bottom line, dragging full-year operating
profits down 32% last year from a year earlier.
Late last year, Samsung ousted its mobile marketing and R&D
chiefs and released a series of mid-range smartphones to directly
take on low-end challengers in China and India.
For the new flagship phone, Samsung executives codenamed the
development process "Project Zero," part of a broader bid to go
"back to the drawing board," in the words of Young-hee Lee,
Samsung's head of mobile marketing.
"We're learning from our missteps," Ms. Lee said in an
interview.
The company reconfigured its production process to be able to
crank out high volumes of curved-screen smartphone displays and
aluminum cases, and laid the foundation for new features like the
mobile payment system through its acquisition last month of
LoopPay, a U.S. startup.
Executives also tried to rein in unrealistic sales expectations
that weighed on company earnings. "There was a lot of learning from
last year, " Ms. Lee said. This year, she said, "we should worry
about being out of stock, not overstock."
The curved variant will retail for about $100 more than the
Galaxy S6, and will be "in the same price bracket" as the Galaxy
S5, Ms. Lee said. The Galaxy S5 sold in the U.S. for about $200
with a two-year contract.
Apart from the curved screen, the S6 and S6 Edge will otherwise
be virtually identical, and both will be in mass production. The S6
has a 5.1-inch display and higher resolution screen than the iPhone
6, which has a 4.7-inch display. The S6 has a 16-megapixel
rear-facing camera, which is twice what Apple offers, and the phone
supports wireless charging technologies.
The biggest shift for Samsung may be the least obvious to most
consumers. By using its own 64-bit Exynos processors to displace
the Qualcomm processors that were long a mainstay of Samsung's
premium smartphones, Samsung will pocket more profit from each
device that it sells.
The chips, manufactured on a 14-nanometer chip process
technology that is a step ahead of its rivals, will translate into
better performance and battery life, analysts say.
Compared with the S5, Samsung is offering more built-in storage,
a higher-resolution display and a 5 megapixel front-facing camera
on its newest model. The S6 also has a touch-activated fingerprint
scanner, a switch from a swipe-activated scanner on the S5 that
users complained didn't always work well.
Min-Jeong Lee contributed to this article.
Write to Jonathan Cheng at jonathan.cheng@wsj.com
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