Analyst: Apple Can’t Let Samsung Win

Apple (NASDAQ:AAPL) can’t afford to take Samsung (SSNLF.PK) lightly and must address the Korean company’s recent successes promptly, Barclays analyst Ben Reitzes has said. According to Reitzes, Samsung’s recent momentum, particularly in the mid-tier smartphone market, “begs an answer” from the iPhone maker.

“To say that the Samsung momentum is an issue for Apple is an understatement,” Reitzes said in a note to investors on Tuesday. “Not only is Samsung helping its own cause, but it catalyzes [Google (NASDAQ:GOOG)] Android as well. As a result, we need to see Apple expand its iPhone market this year in a big way — and improve its platform in 2013.”

The analyst also quoted a note from his Barclays colleague SC Bae, which predicted Samsung would launch a Galaxy S3 Mini and a Galaxy Grand in the coming months. According to Reitzes, Apple could possibly respond with a lower-cost iPhone for emerging markets and a larger iPhone for the phablet category later this year.

The cheaper iPhone, featuring a plastic body and other cost-cutting components, may come in mid-2013, while the phablet iPhone may arrive in October, he said. The second device, possibly featuring a five-inch screen, would offset some of the average selling price reduction likely from the low-cost iPhone. In addition, a new flagship iPhone 5S may add fingerprint authentication, Reitzes said.

Apart from the launch of these new products, Apple also held the potential of taking back some of the lost momentum through an expansion of web services and by expanding its distribution.

“We believe Apple is a platform company and its next great innovations have to come in the form of software and web/data services,” Reitzes wrote. “We believe these services are needed to keep Apple’s ecosystem ahead of the pack and to attract and retain more users.”

As far as the rumors about the company launching a full-fledged television set were concerned, Reitzes said Apple only needed to focus on making the existing Apple TV set-top box device better. “The time to wait and ‘hobby’ is over,” he said.

“[The year] 2013 has to be the year for the TV strategy or it risks falling behind in our opinion. There are many opportunities for Apple to release a new vision for a TV ecosystem in the coming months.”

Copyright Wall St. Cheat Street. All rights reserved.