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What the Galaxy S4 means for Samsung's business

The imminent launch of Samsung’s Galaxy S4 (opens in new tab) is shaping up to be a massive affair, with the official unveiling due to be held at the historic Radio City Music Hall in New York and a second livestream event (opens in new tab) planned for Times Square. In the build-up to the launch, some corners of the Internet have practically subsisted on Galaxy S4 leaks and rumours culled from sketchy online forums, unnamed members of the supply chain, and anonymous sources purported to be in the know.

But despite the endless rumours about the forthcoming smartphone, the only thing we know for sure is that the Galaxy S4 will be a landmark product with a lasting effect on both Samsung as a company and the mobile landscape as a whole.

When the South Korean firm launched the Galaxy S, the first member of its flagship smartphone line-up, in 2010, it had a 16.8 per cent global market share. Just three years later, Samsung has doubled that to nearly 30 per cent of the mobile market and expects to sell more than half a billion mobile phones by the end of 2013. Unsurprisingly, its relatively short road to global dominance has been the result of a series of strategic moves; tonight’s launch of the Galaxy S4 promises to be Samsung’s most important move yet and one that, if successful, will cement the company’s status alongside Apple - or perhaps ahead of it - as a smartphone powerhouse to be reckoned with.

After launching its groundbreaking first-generation iPhone in 2007, Apple was widely considered the leading innovator in the smartphone market. Accordingly, it has dictated the mobile landscape for the past few years, with competitors scrambling to follow its sector-disrupting lead. The result has been a market filled with iPhone copycats that don’t quite live up to the object of their imitation. But Apple’s forward-thinking innovation seems to have trailed off over the past couple of years, and Samsung has carefully positioned itself as the next big thing.

The Galaxy S3 (opens in new tab), which was launched last May, shipped with NFC, Smart Stay, and a higher-resolution AMOLED display - three features that both the iPhone 4S (opens in new tab) and iPhone 5 (opens in new tab) lacked, leading critics to decry Apple for sitting on its laurels and failing to be as “magical” or “revolutionary” as it likes to describe itself. The perception that Apple has become too comfortable with its lead has given Samsung a boost in the eyes of the public. But with the Galaxy S4, which is expected to include such features as eye-tracking technology, wireless charging, and an integrated health monitoring system, Samsung is poised to snatch the innovation crown. Soon, its handsets will be the ones competitors try to best.

The disappointment of the iPhone 5 (opens in new tab) was palpable, and reflected in Apple’s dropping share prices (opens in new tab) and investor disenchantment. The subsequent flotsam of rumours about the iWatch, thought to have been orchestrated by the company itself as it struggles to hang on to its title as innovator, further confirmed that. Samsung, on the other hand, has ramped up its innovation; from the S2 to the S3 and then the S3 to the S4, it has halved its Galaxy S development cycle, while still releasing phones that are significantly new and improved, not just cosmetic updates a la Apple. Six months after the S3,Samsung launched the Galaxy Note 2 (opens in new tab); six months after the Note 2, it is launching the Galaxy S4.

If Samsung is able to maintain this shorter development and production cycle, it will be able to stay ahead of Apple’s slow pace in the mobile market while prompting its legion of followers to clamour for its products several times a year. Whether or not the Galaxy S4 is an objectively better phone that the iPhone 5 is almost irrelevant - what matters is that it will frame Samsung as a company with consistent innovation on its mind. After all, the Galaxy S3’s inferior build quality - a cheap-to-the-touch polycarbonate plastic casing that does not measure up to the iPhone’s aluminium frame - seemed to hardly concern consumers.

The perception that Apple is the true innovator is a narrative the Cupertino, California-based company has pushed with its relentless pursuit of alleged copycats through highly publicised patent suits. That perception has long been one of its advantages over Samsung. But with the Galaxy S4, the tides will likely shift in Samsung’s favour.

Moreover, while Apple has recently struggled with production issues (opens in new tab), Samsung appears to have its manufacturing process under control. While it manufacturers processors and displays itself, Samsung earlier this month made a significant investment in Sharp (opens in new tab), which will land it access to even more components necessary for the half a billion phones it plans to move this year.

In addition to its development cycle, Samsung’s branding and marketing efforts have been pivotal to its success over the past few years. In 2012, the company spent $401 million (£268 million) on advertising its handsets in the US alone, while Apple spent $333 million (£223 million). Unlike other Asian competitors, such as HTC and Huawei, who are producing solid Android phones yet struggling to find a footing, Samsung has leveraged its marketing prowess to propel it into Apple-like levels of popularity and closed 2012 as the world’s top technology brand, according to some analysts.

Meanwhile, Samsung has made other moves - multiplying its US lobbying spend, investing in Sharp, and indicating plans to focus on its own Tizen operating system (opens in new tab) - that suggest it may be preparing to break out of the Android ecosytem. So much so that even Google has been showing signs of concern (opens in new tab) over its partner’s growth. With Samsung’s success in other electronics sectors - components, TVs, white goods - its business is scalable in a way that Apple can only dream of. And the Galaxy S4 will prove to be a warning shot of the kind of cross-market dominance Samsung has planned.