Samsung Slides Into Contention

A couple of years ago, the Samsung brand was closely associated with sleek clamshell phones, typically equipped with gorgeously vivid color displays. In 2005, Samsung introduced a breakthrough slider-phone platform that helped the company to break out of its clamshell niche in Europe. The first wave of these Samsung sliders faded badly by early 2006, and the company faced a half-year drought, but its success with them this autumn in the GSM market has been remarkable.

Samsung sliders like the E900 are remarkably thin and light, barely 90 grams and less than 18 millimeters thick, yet they incorporate ambitious QVGA color display technology (240x320 pixels). For years, slider phones have been notoriously bulky compared to the slimmest clamshells, but Samsung has been able to slim down its models without giving up top-notch display quality. It's a notable achievement, and it must sting Nokia, which pioneered the slider-phone concept in the late '90s, but hasn't invested enough in this niche to remain competitive.

How important are sliders? They could be highly appealing to upgrade-buyers looking for a change of pace after the clamshell avalanche of 2004-06. Slider models can be used as phones without opening them up and they're a nifty way to fit ever-bigger displays and keyboards on separate levels of a handset without hiding the display. They are not everyone's cup of tea -- the exposed display gets scratched easier than in clamshell models.

Samsung E900

Source: Samsung

But in a phone market saturated with clamshell phones, Samsung has timed its slider invasion quite perfectly, in time for a wide fourth-quarter ramp-up and largely ahead of rival slider models with a slim build. It's poised to capture consumers looking for something new, much like Sony Ericsson is making hay in the nascent market for music phones.

For the phone market at large, Samsung's slider success and Sony Ericsson's surprising music-phone momentum present a curveball. Samsung and Sony Ericsson combined may have a shot at capturing perhaps 4 million to 6 million more buyers during the fourth quarter than was projected just a few months ago. These would be consumers unconvinced by Nokia's relatively heavy high-end models and Motorola's latest RAZR generation.

Nokia and Motorola have strong momentum in developing countries, where Sony Ericsson and Samsung are weak. Is the new traction Samsung and Sony Ericsson have among affluent buyers in developed countries enough to dent the performance of Nokia and Motorola?

A shift of a couple of million upgrade-buyers won't have a dramatic impact, but it may tarnish the average sales prices of the top two vendors a bit.

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At the time of publication, Kuittinen held none of the stocks mentioned, although holdings can change at any time.

Tero Kuittinen is a senior product specialist for Nordic Partners, Inc., a pan-Nordic brokerage firm. Although Kuittinen is an employee of Nordic Partners, Inc., the statements above are being made in Kuittinen's personal capacity and are in no way are the statements of Nordic Partners, Inc., nor attributable to the company. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Kuittinen appreciates your feedback; click here to send an email.