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 Yet as the South Korean giant seeks to make devices like the
rigid-curve Galaxy Note Edge stand out from a crowd of flat,
big-screen handsets, making money will depend on producing them
cost-effectively and coaxing developers to tailor applications for
the new format.
Samsung Electronics is headed for its worst annual profit in three
years, under siege as Chinese firms like Xiaomi Technology Co [XTC.UL]
and Lenovo Group Ltd reel in buyers with full-function touch-screen
smartphones that are cheaper. Only Apple Inc has maintained full
brand premium.
The collective industry move toward larger screens makes distinctive
designs tougher to achieve, said Kim Nam-su, a senior Samsung
Electronics designer and an architect of the Note Edge. "A change in
the platform can bring about a variety of new considerations... I
think a curved screen is a big solution for overcoming those
challenges," he said.
As Samsung Electronics moves toward what analysts say could be a
nearly one-third drop in operating profit this year, it's launching
more mid-tier phones to counter cheaper rivals. But a high-tech edge
for the premium market could also help it compete in an industry
that international research firm CCS Insight sees growing to $331
billion by 2018 from $289 billion this year.
The Note Edge is not the first device to use a non-flat format. But
the curved edge on the device is designed to be more than just a
gimmick, offering shortcuts to apps, as well as customization to
display message notifications or stream headlines independent of the
main screen.
RIGID CURVE
On sale in South Korea since late October for close to $1,000, and
also on sale in Japan, the Note Edge is soon to debut in the United
States. It has been well reviewed in the technology press, a
departure from recent knocks that Samsung Electronics goods didn't
stand out against the competition.
While the Note Edge's rigid curve sets it apart, in the premium
handset market its rivals include devices like Apple's iPhone 6
Plus, LG Electronics Inc's G3 and HTC Corp's One M8 handsets.
Subsidiary Samsung Display Co and its rival LG Display Co Ltd are so
far the only firms that can mass-produce the flexible displays
needed to make curved smartphones, having invested more in
developing the organic light-emitting diode technology used to
manufacture them. Analysts say that investment lead will make it
difficult for rivals to produce imitations quickly.
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Samsung Electronics declined to give early sales figures or expected
profit margins for the Note Edge, but the specialist screen
technology required means the curved display is difficult to make
and likely more expensive - something the firm needs to address. The
Note Edge retails in South Korea for about $100 more than the
company's flat-screen counterpart, the Note 4.
In addition, technology for other parts like batteries, circuit
boards and touch-screen layers need to advance further to keep pace
with radical screen designs. In a vicious cycle, per-unit costs will
remain comparatively high until and unless components reach mass
production.
"For future devices where concept designs include tightly rollable
devices with a very small radius of curvature, every major component
will need to be redesigned to fit into a package form factor that
can withstand a high degree of flexing," said Strategy Analytics
analyst Stuart Robinson.
Beyond hardware, the challenge for Samsung Electronics in making
curved products must-have gadgets, rather than a gimmick, is to
convince potential buyers that they can do things on a curved gadget
more easily and effectively than on a flat screen.
To do that, it must foster the development of applications offering
users something new that makes a virtue of the differentiated screen
curvature - and convince developers to invest in what remains a
niche product for now.
"Every time the mobile phone industry has seen disruption is when
the input or interaction experience has changed," said Counterpoint
analyst Neil Shah. "Maybe now Samsung with bent, or flex displays
could develop a new way of interaction with mobile devices, pushing
an ecosystem around that."
(Editing by Tony Munroe and Kenneth Maxwell)
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