Samsung Counts on Bigger Being Better in New Apple Challenge

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New Samsung Phones
Samsung Electronics Co. Galaxy S6 Edge Plus smartphone, right, and a Galaxy Note 5 smartphone sit on a surface in London, July 28, 2015. Photographer: Matthew Lloyd/Bloomberg

Samsung Electronics Co.’s first Galaxy S6 smartphones couldn’t fend off gains by Apple Inc. Now the South Korean company is counting on a bigger wraparound screen and mobile payment system to sway customers.

The S6 Edge Plus and the Note 5 unveiled Thursday will include Samsung Pay when they go on sale this month. The payment service will debut in Samsung’s home market on Aug. 20 and be available to U.S. owners of its high-end Galaxy devices in September.

Samsung will get the jump on Apple before the expected September release of successors to the iPhone 6 and iPhone 6 Plus, which have won over premium users. The 5.7-inch (14.5-centimeter) screens and addition of payments are meant to help Samsung stand out from the array of inexpensive devices by Chinese vendors using the same Android software.

“Samsung used to unveil its Note series in September,” said Greg Roh, an analyst at HMC Investment Securities Co. in Seoul who rates the stock a buy. “The latest unveiling comes about a month earlier, showing it can no longer tolerate losing the oversized phone market to Apple.”

A botched strategy saw Samsung misread demand for the S6 models released in April, failing to produce enough three-sided screens for the Edge while the regular version struggled against the bigger iPhones.

Losing Billions

Samsung’s global smartphone market share fell more than 3 percentage points in the second quarter amid a surge in sales for iPhones and devices from Huawei Technologies Co., Lenovo Group Ltd. and Xiaomi Corp. Samsung had 21.7 percent of the market and Apple 14.1 percent, according to researcher International Data Corp.

Samsung has lost more than $43 billion in market value from the year’s peak in March after posting its fifth straight quarterly profit decline.

“It’s a mature market,” Jean-Daniel Ayme, deputy president of Samsung Mobile in Europe, said in an interview in London. “But we’re very confident when we look at the behavior of consumers around the world that there is still a lot of demand for innovation and new technology.”

The digital wallet is seen as helping Samsung compete against Google Inc. and EBay Inc.’s PayPal for a slice of the U.S. mobile-payments market, which Forrester Research estimates could be worth $142 billion by 2019.

Apple Pay

Samsung is confident even though its payment service comes almost a year after Apple’s. Unlike Apple Pay, Samsung’s can work with the magnetic-strip card readers that are common in stores and restaurants.

On top of that, Samsung won’t charge banks and credit-card issuers transaction fees.

“They should have a larger contingent of financial institutions in a shorter period of time,” said Richard Crone, chief executive officer of mobile-payment researcher Crone Consulting LLC. “The issuers are using this to pressure Apple to renegotiate their deal.”

Samsung said it is teaming up with American Express Co., Visa Inc. and MasterCard Inc., as well as Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc. and U.S. Bancorp, among others, for the service.

“It’s not about being first in the market, but creating compelling technology,” Injong Rhee, executive vice president at Samsung Electronics, said at an event in New York where Samsung unveiled the new service and phones.

At the event at Lincoln Center’s Alice Tully Hall, Samsung also showed a brief video clip teasing its next smartwatch. The short video ended with the release date: Sept. 3.

Samsung declined to comment on prices for the newer phones. Both will use Android 5.1 Lollipop OS.

The S6 Edge Plus will charge an hour faster, even with a bigger battery, when using wireless chargers.

Users can upload videos live through a real-time broadcasting application, while audio will be improved through software that enhances sound and hardware that minimizes distortion and background noise.

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