Smartphone Competition Heats Up
Phillip is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
BlackBerry (NASDAQ: BBRY) looks to release the Q5 in July in Britain, but are European sales enough to drive this stock forward?
A North American release hasn't been confirmed, but the announced release in Europe has created a buzz. The lower-cost smartphone is a stripped-back version of the Q10, which has garnered substantial sales. The Q5 is priced at £350, which is about $540.
European sales have helped the company to sell about a million BlackBerry 10 smartphones since that release early this year. The appeal is catching on, and an RBC analyst said recently the company would sell 14 million of the phones by the end of the year, while the previous projection was 11 million. This shows those who doubted BlackBerry were wrong, and these additional sales will likely lead to market over-performance this quarter. I suspect people are more keen to use new BlackBerry devices because of the lack of progress Apple (NASDAQ: AAPL) has made with its iPhone.
Is Apple's dominance waning?
Let's dispel a rumor about Apple right off the bat. The company has consistently been criticized for not developing anything groundbreaking in a while. At the same time, firms such as Google and Sony have been working on possible breakthrough technologies such as Google Glass and the Smartwatch. But it is very likely that Apple is keeping the development of new technologies secret. This keeps investors who speculate on firms releasing groundbreaking devices more focused on companies such as Google and Sony, while Apple isn't purchased by these investors, thus keeping the price down.
Apple at any time could make a major breakthrough that catches everyone by surprise, such as the iPhone, iPad and Mac. The general public wasn't aware of these groundbreaking technologies prior to their releases, and Apple's stock took off not long after they went on sale. The current price at Apple is reflective of not advertising the technology it is working on, in addition to high Samsung Galaxy S4 sales. But expect Apple to surprise once again with a new major release.
Samsung takes market share
Samsung (NASDAQOTH: SSNLF) looks to be gaining momentum in the smartphone market. In the first month that the Galaxy S4 was released, it sold 10 million units. With the Galaxy S3, it took twice as long to meet that volume. The firm is now considered to be on par with the iPhone in terms of functionality. And if momentum continues in this direction, new editions of Samsung smartphones will outsell those offered by Apple.
Analysts have downgraded the monthly sales of the Galaxy S4 from 10 million to 7 million. Analysts believe there won't be as much appeal for the smartphone in Europe and South Korea, Samsung's home base. Because of this, they say, the stock could become stagnant, and investors could return to Apple after seeing how the company is able to recover from when it was losing sales to Samsung in May. However, I don't see a reason for slowing sales, and analysts were vague for their reasoning. However, they said initial sales estimates were overly optimistic and this could be due to slowing high-end smartphone sales.
The innovation factor
In the smartphone business, new ideas often dominate sales. Apple released its first smartphone in 2007, and the technology was incredibly innovative. The same can be said for its tablet and the Mac computer. Research In Motion was groundbreaking in its first BlackBerry smartphone release. But I haven't seen Samsung come out with a gadget that has had as big of an impact. That tells me that while Apple, and to a lesser degree BlackBerry, can be expected to make great strides, Samsung isn't a leader of innovation and will continue to play catch-up.
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Phillip Woolgar has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!