Apple probably drank 6% of Samsung’s milkshake

Samsung’s Galaxy S4: too big for its britches?
Samsung’s Galaxy S4: too big for its britches?
Image: AP Photo/Jason DeCrow
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Just weeks after opening sales of their new flagship phone, the Galaxy S4, Samsung Electronics Co has lost $12 billion in market value. The 6 percent share slide, the biggest Samsung has seen in nine months, was sparked by downgrades in global sales forecasts for the third quarter—from 30 million handsets to 25 million.

Samsung, which released both a high-end and “mini” version of their flagship phone to broaden its range of price points, just overtook Apple in smartphone sales for the first time since the iPhone 5 was launched. So what’s with the downgrade?

According to Reuters, sales have already dropped off for the Galaxy S4. With high-end headset sales lagging for all smartphone players, investors may be worried that Samsung’s heavy investment in the S4 won’t pan out, especially if its low-range headset is undercut by cheaper options.

Another worry for investors: Apple’s recently announced plan for an iPhone trade-in program, which will pay users for their older models to encourage them to upgrade. That, along with the rumors swirling about the launch of a cheaper iPhone, sets up Apple to knock Samsung out of the mid-range handset market, as high-quality refurbs from the trade-in policy hit the market. Overall smartphone sales are also on the decline, with 56% of Americans already owning smartphones. That argues for Samsung to focus on easy upgrades for its existing customers, rather than new smartphone owners.