Last week, Korean electronics giant Samsung did something it had never done before. It showcased its latest mobile phone offering — the soon to be launched Galaxy S4 in New York.

The choice of location was deliberate. New York, a-k-a the ‘big apple’, is a worthy contender for the title of the world’s greatest city, still the trend-setter in everything from hot stocks to hotter skirts, and home turf for the other ‘big apple’ — Apple.

The US also remains the final frontier for any mobile phone maker with dreams of global dominance. If you can’t wow New York, you can’t wow America. And if you can’t wow America, you can’t shake Apple.

Several technology writers and commentators — mostly American, one might add — have already dismissed Samsung’s Galaxy S4 as “not an iPhone killer” and therefore, presumably, not worthy of being taken seriously.

Perhaps they are right. After all, despite the giant leaps in market share achieved by Samsung, it is yet to mortally wound Apple, which continues to dominate the US market, and continues to enjoy a significant slice of the worldwide smartphone market.

Bigger profits

More importantly, as several studies have shown, Apple enjoys a far larger share of the profits from smartphone sales compared to Samsung, which ships bigger volumes across a bewildering range of models and price points — almost all lower than Apple’s.

So far, that’s right by Apple’s playbook, which is essentially focused on highly profitable high-end smartphones. Apple is still arguably the brand that commands the biggest premium in what is essentially becoming a commodity market — as exemplified by the astonishing 40 or so Indian phone manufacturers currently churning out affordable smartphones based on Google’s Android platform, which Samsung is also using for all its smartphones.

Serious Contender

But to write off Samsung on the basis of the S4’s inability to send Apple’s stock price crashing — in fact, the day after the launch, Apple’s stock price rose while Samsung’s fell — would be to seriously undervalue ignore what Samsung did manage to achieve with its S4 extravaganza in one of the most iconic locations in New York’s theatre district.

On launch day, Samsung got as much media and popular attention as any launch by Apple has ever achieved. There were block-long queues to get into Radio City Music Hall to watch the show. More tellingly, there were hundreds — perhaps a few thousand — curious spectators who stood in freezing weather outside to watch the launch being live-streamed on giant electronic billboards at Times Square.

With that, Samsung has achieved what it set out to when it launched a determined attack on Apple’s dominance with the launch of the first Galaxy S series phone, barely two years ago — to be seen and heard as a serious contender for Apple’s crown. Whether the S4 achieves that, or Apple manages to stay on top with the iPhone 5 or the upcoming iPhone 6 is a matter of detail. In a world where there was Apple and everyone else, there is now Apple and Samsung — and then everyone else, including struggling Nokia and an even worse off Blackberry. Now that’s not bad going for a company which started off as a commodity parts supplier for other phone makers around the time the mobile phone revolution was happening.

That Apple is worried is clear from the kind of advertising and publicity juggernaut it launched in response, as well as some not very subtle knocking of Samsung by Apple CEO Tim Cook.

But talking is different from doing. What Apple has been forced to do is to buy into Samsung’s theory that when it comes to display screens, ‘bigger is better’.

Then there is the issue of expectations. Of course, Cook had his task cut out stepping into the late Steve Jobs’ shoes, but Apple’s bigger problem was that it failed to meet the ever rising expectations of its fans with the iPhone 5, which essentially offered only a faster processor, a slightly slimmer build and a very problematic map app (the result of Apple deciding to boot out Google apps as a result of its ongoing feud with the search behemoth).

Cook’s iPhone at best met expectations perhaps, whereas Samsung has certainly exceeded the expectations, not only of its existing user base, but arguably several iPhone fans as well. It managed to take the commoditised (and free) Android operating system and add its own unique ‘skin’ to it, making the phone more a Samsung phone rather than an Android phone made by Samsung.

The ‘wow’ factor

Now that, as any student of branding will tell you, is half the battle won already. As to the ‘wow’ factor — well, that’s a different issue altogether. But with some impressive new widgets like an eyeball movement sensor or proximity gesture recognition capabilities, Samsung has managed to throw the gauntlet at Apple’s feet. And if Apple picks it up, as it is clearly likely to, well, that is yet another skirmish won in the ding-dong fight for consumer mindshare. The real challenge, for both Apple and Samsung, is now sustaining this never ending chase of the consumer. As Nokia and Blackberry, both of which enjoyed their own seasons in the sun, have found to their cost, there comes a time in the battle for the consumer’s mindspace when merely meeting expectations is not enough.

Consumers, their appetite for innovation whetted by your own past efforts, have this disconcerting ability to set the bar higher than what you might think possible. So you can no longer afford to meet expectations, you have to exceed them, any time and every time.

Doing so sustainably — and profitably — remains the greatest challenge facing enterprises operating in the consumer marketplace today. Unfortunately, a growing number of companies are finding, to their cost, that when it comes to ‘better and cheaper’, there can be literally no limits to consumer desires.

Or should one say greed?

>raghavan.s@thehindu.co.in

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