Apple Is Being Psychologically Crushed By Samsung

| About: Samsung Electronics (SSNLF)

With an Apple-like buzz from the media and consumers themselves, Samsung (OTC:SSNLF) has unveiled its new flagship smartphone, the Galaxy S IV, at the Radio City Music Hall in New York. I personally expected Apple (NASDAQ:AAPL) to try and divert the focus, at least partially, from the Big Apple in some way, as they had already done sometimes in the past (usually with minor announcements, such small product upgrades). And indeed they tried, but they tried in such a mediocre way, that it now appears even clearer how Samsung is winning over Apple, if not in terms of sales, in terms of how the companies are currently being perceived.

One of Steve Jobs' greatest talents was his ability to market his products as no-one else in the world could do. Apple's 1984 ad, made in occasion of the first Mac, has gone down in history as one of the most clever ads of all time. "Think Different," which was made shortly after Jobs returned to Apple in 1997, has been hugely acclaimed. The "Get a Mac" campaign, which ran for three years, cunningly depicting all the advantages the Mac has over a Windows PC, has since become a cultural icon. It was even named "campaign of the decade" in 2010.

Since Tim Cook took the reins, though, we have not seen a single stand-out ad from Apple. The last few ads, albeit cute, are not certainly what you'd call daring: they focus merely on the products, hoping that they speak for themselves, without even mentioning the people who use them. The only time we saw an effort in this direction, with the "Genius" ads aired during the Olympics, the effect was disastrous: many have seen them as the worst Apple ads in more than a decade and, in fact, they have since not been rebroadcasted and were almost immediately pulled from Apple's YouTube channel.

On the other hand, one of the main reasons Galaxy smartphones are selling like hotcakes is that Samsung is spending billions marketing them: Asymco's Horace Dediu estimates that, in 2012, Samsung spent more than Apple, Microsoft and Coca-Cola combined advertising its products. But not only Samsung is spending way more than Apple promoting its handsets (which is not necessarily a sign of cleverness), it is doing so with bold and provocative ads, going brasher and more audacious day in, day out. The same Galaxy S IV unveiling (thanks also to the setting) quite reminded of a Broadway spectacle, not much of a smartphone launch.

Moreover, a few days ago Tom Keene, Bloomberg anchor, and iPhone user, made a question that caught my attention. While talking to Wired writer Steve Levy, he said:

"What I see is a generational divide, is that true? Older people use iPhones, younger people use Samsungs."

Is he right? Probably not. Even Steve Levy told to him that it still wasn't true. But why Keene (and many other people) has this perception then? It is mainly due to Samsung's clever ads: while Apple played defense with its average ads, Samsung ran a few commercials mocking Apple users, the so called "fanboys." One in particular had exactly the intent to reinforce the perception Keene brought up a few days ago on Bloomberg: it shows a young hipster waiting in line for the iPhone 5, while using a Galaxy S III; when asked by the other people if he was going to ditch the phone for the Apple-branded one, he says that no, he's just holding the spot for his parents. Samsung here was trying, and quite cleverly so, to do to Apple what Apple did to Microsoft a few years ago: make your rival's product, and the people using your rival's products, appear uncool, while suggesting that your products are the real deal.

Has Apple fired back since then? Nope, not even tried. After a Super-Bowl teaser ad by Samsung went viral, even the "Think Different" campaign creator suggested that Apple needs to step up its advertising game, but we haven't seen a single ad trying to counter-attack the notion (not necessarily true, but well conveyed to the public by Samsung) that Apple-gadgets are getting out of favor, especially among young people, in favor of the Galaxy smartphones. It can't be that Apple doesn't care about what Samsung is doing, they would be presumptuous and quite blind to do so since the hype surrounding Samsung is totally unprecedented. The fact is that while Samsung is attacking, Apple's playing defense.

Wednesday's attempt to steal the thunder from the Galaxy S IV launch clearly shows it: in a rare move, Phil Schiller, Apple Marketing Senior VP conceded an interview to The Wall Street Journal and to Bloomberg, trying to downplay yesterday's event. He stated that the iPhone lures 4 times as many Android customer as it loses to rivals, and he underlined the fragmentation that characterizes the Android ecosystem (which he called "plain and simple").

I was actually quite surprised to see that Apple had chosen "The Journal," for his interview, since they have been putting a negative spin on every Apple piece of news as of late. And sure enough, they managed to do it even this time: The Wall Street Journal doesn't have any doubts (and rightly so): Apple is worried and is clearly playing defense here. What Schiller has done, in fact, is a never-seen-before act by Apple. Steve Jobs used to trash his rivals' products too, but he picked his spots carefully, he didn't go to the press directly. Moreover, when he did so, Apple was clearly far ahead of the competition. Now it is not so clear. Many pundits have actually called the Galaxy S III (the predecessor of the smartphone presented yesterday), if not still superior to the iPhone 5, at least on par with it.

Schiller's attempt therefore looks tame, as tame looks the whole attitude Apple is taking on in this battle of two with Samsung. A frightened Apple, going to the press trying to play defense, will not be able to spur a rally, and the market will continue to pressure it. With the quarter ending March 31 expected to be weak (even by the analysts upgrading the stock yesterday), and this new smartphone from its main (and almost lone) rival to hit the market soon, Apple needs to act swiftly, or it may lose even more momentum to Samsung and see its shares fall even further.

Disclosure: I am long AAPL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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