Apple Upstaged By Samsung... Until Next Week

| About: Apple Inc. (AAPL)


Samsung presented new mobile devices at IFA, preempting Apple's iPhone 6 event.

Samsung's new Galaxy Note 4 represents its first foray into mobile 64 bit computing, but only partially closes the gap with Apple's 64 bit processor and iOS 7.

Apple's forthcoming iPhone 6 will extend its 64 bit processing lead while taking away a key Samsung discriminator: screen size.

Samsung (OTC:SSNLF) seized the opportunity presented by IFA, the European equivalent of CES, to steal attention away from Apple's (NASDAQ:AAPL) iPhone 6 event, less than a week away. It worked, but it will offer Samsung only a brief respite from the smartphone market share decline it suffered in Q2. In contrast, Apple's new smartphones will position it for increased market share among the top five vendors.

Stagey Samsung

As I pointed out in "Apple's iPhone 6 Event: A Turning Point," Samsung lost worldwide market share among the top five vendors in Q2, according to IDC, while Apple's position among the top five fractionally improved, indicating that iPhone had arrested the market share declines of the past year. I believe the iPhone's market share improvement is directly attributable to Apple's superiority in two key areas: mobile operating systems and mobile processors.

Being an Apple developer, I tend to take these things for granted, so I was surprised to see this statement in a recent article by Michael Blair:

The iPhone 6 will have a larger screen and hopefully a longer lasting battery. Beyond that it will demonstrate to users that not much has changed since the iPhone was first released.

Although I've been compared to Blair, I don't follow him closely, so I was unaware of his lack of cognizance of the technical discriminators offered by iPhone 5s: the only 64 bit processor in a smart phone, the only true 64 bit smart phone operating system, and many others. If a fundamental premise of the Apple bears is that nothing much has changed since iPhone was introduced, no wonder the shorts have been taking a bath.

Samsung officially unveiled the Galaxy Note 4 phablet at IFA yesterday in a presentation that was as much about corporate image projection as it was the products. A tech-savvy Korean young man who spoke immaculate American English led a team of three presenters, including his young male and female English sidekicks. It was always the Korean kid who had to explain to his counterparts how the amazing Samsung technology worked. In a bit of residual sexism, it was always the English girl who was completely clueless, but in awe of the Samsung technology.

With the Galaxy Note 4, Samsung will begin to close the 64 bit gap with Apple, but only outside the U.S. The U.S. version is reported to offer a Qualcomm (NASDAQ:QCOM) Snapdragon 805 quad-core processor, which won't be 64 bit, as Qualcomm's 64 bit processors aren't expected until next year. Apparently Samsung has decided that Americans care more about download speed, as the 805 features faster LTE. The rest of the world gets the Samsung Exynos 5433, a true 64 bit processor featuring 4 high performance cores and 4 low power cores, but with slower LTE.

The Note 4 is reported to ship with Android KitKat, so it will be somewhat hobbled by the 32 bit OS, but I don't doubt that it will be upgradable to Android L or Samsung's customized version of L when it becomes available. Even with KitKat, Samsung's 5433 processor has been benchmarked highest among Android devices, and when equipped with L, the 5433 will only be faster.

Note 4 also offers other features that Samsung hopes will be discriminators. Perhaps the best is its high resolution 2560 x 1440 pixel AMOLED (Active Matrix Organic LED) display. Samsung has been a pioneer in AMOLED screen technology, which offers better color saturation and higher contrast than LCD.

The Note 4 also comes with a pressure sensitive stylus, useful for selecting graphics objects that are too small on the screen for a fingertip, and for handwriting. Although one can buy a stylus for Apple's touch screens, having a pressure sensitive stylus built in does work better for tasks such as drawing and handwriting recognition.

The Technical Gap

With all those features, will Samsung have closed the gap with Apple's iPhone? I don't think so. When iPhone 6 is unveiled next week, it will feature second generation 64 bit processing capability in the form of a second generation operating system and Apple designed 64 bit SOC (system on chip).

When iOS 7 was introduced last year, it was remarkably free of glitches for a first-ever 64 bit mobile OS. By virtue of owning its developer tools, Apple was able to ensure that the OS worked well out of the box for both legacy 32 bit devices as well as new devices such as iPad Air and iPhone 5s that used its new 64 bit A7 SOC. Existing users were able to upgrade to iOS 7 without missing a beat. This is an achievement much overlooked, but which I'm certain Android L will not be able to duplicate.

iOS 8 will be even better, and once again be available to most Apple device users. I've been using the Beta and found it to be a great experience. App compatibility is once again seamless, the OS feels faster than 7, even on older phones such as the 4s, and 8 offers a host of new features such as Healthkit that have been widely discussed elsewhere.

The secret weapon of iOS 8 turns out to be its integration with other Apple platforms, Mac OS Yosemite (which I've also been previewing) and its wearables. Apple's continuity technology allows users to initiate tasks on one device and complete them on another. Devices are made aware of each other through Bluetooth and WiFi, and share data with each other in order to manage these transitions.

This is a discriminator that will feel invisible to those outside the Apple ecosystem, especially those who trash Apple's cloud computing capability. These people simply don't understand that the Apple vision of iCloud is to make it as unobtrusive as possible. It's easy to be unimpressed by this if you're not familiar with the underlying technology that makes it possible.

Apple's second generation 64 bit SOCs will also reassert their lead over other ARM processors and Intel mobile processors as well. When I talk about 64 bit processors, especially in connection with Apple's, it's really a simplifying catch-all term that hides much of the technical detail. Let me discuss that detail just a little.

ARM has made available for more than a year 64 bit processor designs (as licensed IP) for manufacturers to use. Once Apple introduced the A7, manufacturers embraced ARM's 64 bit designs in order to catch up. Qualcomm, which had been featuring it's own ARM processor designs, will use ARM's IP for its upcoming 64 bit processor family. Likewise, Samsung's Exynos 64 bit processor licenses the ARM designs.

Apple didn't use the ARM IP to design the A7, except to maintain instruction set compatibility with ARM's 64 bit enabled ARM v8. Apple produced its own unique design which was similar in some ways to Intel's Haswell micro-architecture, as discussed by Anand Lal Shimpi. Apple's ground-up design of the A7 didn't just implement wider data paths and more memory, but was an inherently more powerful processor.

Apple's next generation processor also will be Apple designed. The details of what Apple has in store remain to be seen, but I have no doubt that the processor will be faster than its predecessor. This next generation A8 will probably move to a smaller process node, such as 20 nm, as well as feature a higher clock rate and more processing cores. I expect Apple to maintain its lead in 64 bit mobile processing for the next year.

A Phablet Blitz

When Apple unveils its new larger screen iPhones, widely expected to be a 4.7 inch and a 5.5 inch model, Apple will unleash a wave of pent-up demand that has been inhibited by the lack of a larger screen. These devices probably will not feature AMOLED screens or pressure-sensitive pens, but will be endowed with iOS 8 and the elegant user experience for which Apple is famous. I expect Apple's new phablet to blitz the marketplace and produce true market share gains for iPhone.

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