Samsung's strategy of releasing devices for all corners of the market means that for any given price point or feature list, the device usually has one or two devices that fits the niche. This strategy feels as though Samsung are flooding the market with similar devices, which when combined with intense marketing, has helped sales. This approach brings Samsung into competition with all corners of the market, which ultimately helps the market improve devices across the board. For Samsung, the advantage is that a customer buying a lower or mid-range device will have more of a natural bias towards buying a more expensive Samsung product when they are due an upgrade, because it will have a familiar look and feel. However, there have been signs that customer loyalty is reducing as customers become more and more tech savvy: the fear of a new device with a new interface is much less these days. This is combined with Samsung's competitors upping their game and is one of the reasons why Samsung Mobile has struggled over the last couple of years.
To take two extreme examples of this, Xiaomi and Apple, at the less expensive and more expensive ends of the market. In each case, Samsung's devices have been in direct competition with Xiaomi and Apple devices – even if not necessarily in the same corners of the world. The flagship Galaxy S and Galaxy Note devices have taken on the iPhone models, and we have seen Apple adopting Samsung's large screen device format, and Samsung adopting Apple's premium build ideas. And then we come to wearable technology, where despite a relatively early lead into the smartwatch idea compared with most Android competitors, Samsung's Galaxy Gear has not been a shining success story. There are a few reasons for this: one is structural, where the original Galaxy Gear devices required a high end Samsung Galaxy smartphone. Second, by the time Samsung adopted Android Wear for one of their smartwatch lineup, the competition had moved in with more tempting, better priced alternatives.
Now, Samsung faces competition from the Apple Watch and Xiaomi Mi Band. The Apple Watch is very expensive and restrictive, but more than seven million units have sold over the world in two months compared with two million Samsung Galaxy Gear smartwatches over two years. The Mi Band is a very well priced smart wearable band designed to help people track their activity, which sells for about $18 equivalent. It's quickly moved to become second only to the Fitbit wearable, but taking a quarter of the wearable band market in the first quarter of the year. Xiaomi have sold six million of the Mi Bands. Samsung's current wearable portfolio has not received so much attention, but perhaps things are going to change later in the year when Samsung reveals its next generation of smartwatch technology called Orbis. We believe that the Orbis product will be revealed along with the Samsung Galaxy Note 5. And Samsung have their work cut out, as the Orbis is likely going to sit between the very attractively priced Mi Band and the premium Apple Watch.