Caught between decreasing earnings and challenges posed by Chinese competitors, Korea’s tech giants Samsung Electronics and LG Electronics aim to create new growth momentum with their upcoming flagship smartphones, the Galaxy S7 and G5, respectively.

As announced by both firms in January, they will be unveiling their marquee handsets, on Feb. 21, a day before the beginning of the Mobile World Congress trade show in Barcelona from Feb. 22 to 25.


It is rare for the launch dates of both companies to coincide and it proves how desperate they are to stay ahead in the competitive smartphone market.

Samsung was able to maintain its position as the largest smartphone-maker in the world last year by shipping 324.8 million smartphones, followed by Apple, Huawei, and Lenovo, which shipped 231.5 million, 106.6 million and 77 million phones, respectively, according to market research firm IDC.

Xiaomi, which is often mocked as an Apple copycat, took the fifth spot by shipping 70.8 million phones last year.

LG, once considered as one of the top three players along with Samsung and Apple, did not even make the top five, with its sales reportedly at 59.7 million units.

“Usually the conversation in the smartphone market revolves around Samsung and Apple, but Huawei’s strong showing for both the (fourth) quarter and the year (2015) shows how much it has grown as an international brand,” said Melissa Chau, a senior research manager from IDC. She also forecast that the Chinese firm, which has been breaking into global markets in recent years, has gained traction to solidify its position as the third largest smartphone manufacturer in the world.

Although Samsung was able to retain the top position in unit sales, its year-on-year growth rate in sales has significantly slowed, at 1 percent last year. Meanwhile the growth rates of Chinese firms have surged, with double digit growth rates boosted by growing footholds in emerging markets including India and Southeast Asia.

With its annual revenue last year slipping to 200.3 trillion won from 206.2 trillion won, Samsung also tightened its belt. Its research and development spending last year reportedly went down by 4.7 percent to 13.7 trillion won from a year earlier. The last time Samsung’s R&D spending had gone down was in 1999 when major conglomerates here were struggling from the aftermath of the Asian financial crisis in 1997.

Ever since Samsung failed to lift the sagging performance of its mobile business with the Galaxy S6 last year, the Korean tech firm has been working hard to beef up its software segment. It aims to outdo its rivals by offering differentiated smartphone features.

One of the tech behemoth’s three flagship business units is its information technology and mobile communications division. In a recent conference call, Samsung revealed that it had divided the development team under this division into two – software development and hardware development.

“Samsung knows that things are different now from the mid-2000s when they rolled out 250 feature, or 2G, phones with diverse specifications in a year,” a Samsung insider said.

“The company rolls out only around 20 smartphones now and there is not much difference in the specifications of flagship smartphones out in the market, so it has to put more focus on software than hardware to outperform rivals,” the official added.

Mobile payment solution Samsung Pay and streaming service Milk are notable examples of Samsung’s software push.

Not to be outdone in the competition, LG is also trying to push the envelope.

The G5 is expected to get some design makeovers, such as a metal body, and to be fitted with mobile payment solution LG Pay.

Yoon Boo-hyeon, a vice president of LG Electronics, told analysts in a conference call that “it would be able to ramp up production for the G5 more than preceding models.”

A market analyst expects that Samsung and LG will be able to gain a bigger share of the market from Apple, which is likely to launch the new version of its iPhone later this year.

“As the iPhone 6 and 6S seem to have lost steam in recent months and its new iPhone will likely only be unveiled in September as usual, Samsung and LG will be able to eat into the market share of their California-based rival,” he said.

By Kim Young-won (wone0102@heraldcorp.com)