Samsung Unveils Pen-Equipped Phone to Keep Lead on Apple

Geoff Blaber of CCS Insight gives his analysis of Samsung's new Galaxy Note II, which was launched on Wednesday.

Samsung Electronics Co. (005930) unveiled new phones running the mobile operating systems of Google Inc. (GOOG) and Microsoft Corp. (MSFT) as it seeks to defend its lead over Apple Inc. (AAPL) amid patent disputes with the iPhone maker.

The new version of the pen-equipped Galaxy Note smartphone has a 5.5-inch screen, larger than its predecessor, and runs the latest version of Google’s Android operating system. The device is loaded with software that recognizes handwriting from a digital pen.

“The Note has evolved from every smartphone that we have launched,” Min Cho, a senior manager for Samsung’s mobile unit, said in an interview at the IFA consumer-electronics fair in Berlin yesterday. “We can address more consumers and more market opportunities because we can provide the capability of smartphones and tablets at the same time.”

Samsung, the world’s top smartphone seller, is offering a variety of Galaxy handsets, with different sizes and features, to attract consumers from narrower choices offered by Apple. The new Galaxy Note may also help to cushion the impact of a potential U.S. sales ban on some of Samsung’s other smartphones. Apple won more than $1 billion in damages Aug. 24 after a jury found the Suwon, South Korea-based company infringed six of seven patents at stake in the trial.

Windows Phone

Samsung also showed a new handset yesterday that runs Microsoft’s new Windows 8 mobile system, the Ativ S with a 4.8- inch screen. The phone puts Samsung in competition with Nokia Oyj (NOK1V), which decided to team up with Microsoft in the smartphone market last year. Nokia is set to unveil its own smartphones that use the new Windows 8 software on September 5.

Nokia rose 3.4 percent to 2.35 euros in Helsinki as of 11:06 a.m. Samsung shares dropped 1.2 percent to 1,215,000 won in Seoul.

More than 10 million units of the first Galaxy Note were sold in the first nine months, helping Samsung regain the lead in global smartphone sales from Apple this year. The updated digital pen will allow consumers to hover over the screen to preview content and will be available for third-party applications.

Apple is seeking a U.S. sales ban on eight models of Samsung. The list includes several devices in the bestselling Galaxy lineup, though not the Note smartphone. Apple’s request for a permanent ban on U.S. sales of some Galaxy devices will be considered at a Dec. 6 court hearing.

Apple is Samsung’s largest customer, buying chips and displays from the South Korean company. Apple accounts for about 9 percent of Samsung’s revenue, according to a Bloomberg supply- chain analysis.

Android Camera

In the last quarter, Samsung controlled about 35 percent of the global smartphone market, followed by Apple with about 18 percent, according to market researcher Strategy Analytics.

Samsung also unveiled a 16-megapixel camera, called the Galaxy Camera, that runs the latest Android operating system and is able to access the Web via Wi-Fi technology and mobile networks.

“Android was the best option when we considered our platform,” Wonhyung Cho, an assistant manager at Samsung’s digital imaging business, said in an interview. “We wanted access to Android with the Google Play store and to make the full set of camera apps available.”

Samsung opted to tie the camera to the Galaxy range of handsets to associate it with the Android platform, Cho said. With the Galaxy series, which encompasses smartphones and tablet computers, “we had one empty category.”

To contact the reporters on this story: Jonathan Browning in Berlin at jbrowning9@bloomberg.net; Jun Yang in Seoul at jyang180@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net; Michael Tighe at mtighe4@bloomberg.net

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