Why record sales of Samsung’s flagship Galaxy S4 smartphone won’t calm investors

Just because it’s as big as your head doesn’t mean it will sell.
Just because it’s as big as your head doesn’t mean it will sell.
Image: AP/Yui Mok
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Twenty million Samsung Galaxy S4 smartphones—the primary competitor to the iPhone—have apparently been sold in the first two months since the device’s mid-April launch, but those numbers are unlikely to address deeper fears investors have about the South Korean electronics giant. On June 7, analyst notes from JP Morgan, among others, revised downward previous estimates for third quarter sales of the Galaxy S4. That sent the stock plunging 6.2%, and lopped $12.4 billion off of Samsung’s $187.8 billion valuation.

In other words, while Samsung continues to sell S4 smartphones at an unprecedented rate for the company, its investors fear that growing competition and market saturation will slow that sales rate in future.

The phone only launched two months ago, so it’s hard to say how the S4 will be performing by September, but here are the factors analysts are taking into account: Competing high-end smartphones from the likes of HTC and Sony are at least as compelling as the S4; rumored cheaper iPhones (and an iPhone buyback program from Apple) could lure people away from Android altogether; and the number of people who still feel the need to buy or replace a high-end smart phone could be shrinking—in other words, the market is getting saturated.

And here’s one more damaging factor for future S4 sales: As hype builds for the release of Google’s forthcoming Android Moto-X “superphone” in October, Samsung’s flagship phone could cease to be the de facto high-end Android device of choice.