Is the party over for high-end smartphones?

Every company loves maximum profits. For years, Apple and Samsung have sold high-priced smartphones loaded with features that were eagerly snapped up by consumers in mature economies in North America and Europe. Now the two largest smartphone makers face a changing consumer profile where basic is best and inexpensive is in vogue.

Just days ago, research giant Gartner noted low-cost devices comprise the bulk of both firm’s device sales, making questions of whether to sell ‘cheap’ handsets only a distant – and irrelevant – memory. Now comes fear from Wall Street that the salad days of smartphones are over for Apple and Samsung…

Bernstein’s Toni Sacconaghi Monday on CNBC tried to explain (via Fortune) why both smartphone makers have recently been punished by investors.

Samsung’s tepid sales of its new Galaxy S4 are “perhaps not fulfilling expectations about the high end of the smartphone market.”

In other words, “the Street is thinking that if Samsung can’t sell as many high-end smartphones as expected, then neither can Apple,” writes Philip Elmer-DeWit.

Seems like a pretty good assumption.

Source: IDC European Quarterly Mobile Phone Tracker, May 2013.

Growth has slowed in developed nations, such as the U.S. and in Europe, as adoption of smartphones is nearly complete. Instead, the competition isn’t over whether to buy a smartphone or stick with your dumb feature phone, but whether you’ll stick with Apple or try Android.

In a way, the smartphone market in the U.S. resembles competition among cellular carriers, where the customers drift from one brand to another.

“The challenge in the smartphone market is also that, as penetration move more and more to the mass market, price points are lowering and in most cases so do margins,” Gartner announced Monday.

In Samsung’s case, almost half of its smartphone sales are in the sub-$200 category.

If the rumors are true, Apple will launch a less-pricey iPhone sold contract-free to the mid-tier sub-$300 segment in developing markets.

Some watchers expect the device to actually replace Apple’s free iPhone 4/4S on-contract phones, but that’s just speculation at this point.

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Samsung unveils new Galaxy S4 handset

Say what you will about Samsung, but the company has managed to distance itself from the other Android device makers to become Apple’s greatest competitor in the smartphone space. The two of them, in fact, account for a majority of all handset profits.

So you can understand why we’ve been so interested in seeing Samsung’s new flagship handset, the Galaxy S4, which it just unveiled onstage at its New York-based Unpacked event. And as usual, we’ve put together a handy roundup of all of the highlights…

Before we get into the phone, it’s worth saying a few things about the event itself. It was weird. Like really weird. The entire thing felt like a bad Broadway play with stage actors, cheesy jokes, ballerinas and tap dancers. It was easy to forget there was a phone at all.

 

 

But onto the S4. Turns out, most of the rumors were true. The phone looks just like the S3, but features a 5-inch Super AMOLED display with 441ppi, and it’ll ship with either a Samsung Exynos 5 or Qualcomm Snapdragon S4 Pro processor, depending on the region.

Other specs include a 13 megapixel rear camera, 2MP front camera, and 2GB of RAM. It will come in 16, 32, or 64GB of storage flavors (SD card slot as well), with a 2600mAh battery, LTE support, and 8 built-in sensors including IR, temperature and pedometer.

That’s about it for the hardware. As for the software, the phone comes packed with dozens of features, from eye-scrolling to dual camera shoot and record. We’re not going to try and list them all here, but we figured we’d mention some of the more notable ones.

• S Translator understands 9 languages, speech to text and text to speech. And it can even translate text from photos.
• Dual camera support allows for the person taking a video or photo with the S4 to be included in the shot.
• Eye tracking lets you scroll through pages by glancing up or down, and smart pause pauses videos when it detects you’ve looked away from the screen.
• Air View is a touch-less interface that allows you to scroll through menus and content with air gestures.
• S Health uses the S4′s 8 sensors to track your fitness progress—essentially it’s like having a Jawbone Up or FitBit in your phone.

Again there were actually a number of software features shown off during today’s presentation, and there’s probably several more that went unmentioned. If you want to get a more in-depth look, we recommend checking out The Verge’s coverage. It’s top notch.

And here are some hands-on videos for good measure:

Samsung says that it will start shipping the Galaxy S4 at the end of April, but no prices were given.

So, what do you think of Samsung’s Galaxy S4? Should Apple be worried?

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