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By contrast, Samsung is succeeding by tweaking its basic design to give something unique to each carrier and user profile. Galaxy S launched with four brand names, all with slightly different feature sets, in the US alone, one for each national carrier. Since then, US Cellular has added a fifth variation, the Mesmerize, and this week, Verizon Wireless launched its second Galaxy S family member, the Continuum, which boasts a second AMOLED screen for real-time updates such as social networks or news feeds. MetroPCS is even hinting it will soon have an LTE version of Galaxy S.

This constant barrage of design tweaks manages several feats that are not possible for vendors of lesser scale and resource. It enables Samsung to launch with large numbers of operators, rather than confining itself to a few channels. It also offers them some differentiation, to guarantee its phones a higher position on the carriers' shelves and marketing campaigns. It also allows the firm to continually push something "new" to keep users' attention and perhaps attract customers with a particular feature, such as the Continuum updates screen. But most of these innovations are trivial in terms of the added cost of development, manufacturing and marketing that they represent, keeping Samsung's economies of scale and margins almost intact.

The tablet market

This is rather like the Nokia approach to featurephones, which stood it in good stead for so long, but applied to high-end models, and Samsung will also extend the strategy to tablets. Shin said the firm was preparing to follow the Galaxy Tab with models with various screen sizes between seven and 11 inches and probably even larger, and the firm expects to sell 1 million Tabs this year.

One of the attractions of the tablet market is that, for a vendor of high-end smartphones, the design and component requirements are similar. This shortens the learning curve and allows for significant crossover in the supply chain, a factor that is helping to drive early price competition. The fact that the tablet is not a huge shift in thinking for manufacturers lowers the barriers to entry for companies such as Apple and Samsung, which can build extensively on their existing smartphone platforms to get products to market quickly and cheaply. Most of the radical aspect of these gadgets lies in the usage patterns they support, not their actual hardware.

This is seen in the heavy overlap between Samsung's component list for Galaxy S and Galaxy Tab. The Tab has a bill of materials far closer to that of a phone than an advanced consumer media product. According to teardowns by iSuppli, its BOM is $205.22, far less than the $264.27 figure for the 3G, 16Gb iPad. This is partly because of its smaller display, and partly because of Samsung's huge purchasing power for components that also appear in Galaxy S and/ or Wave.

“The Galaxy Tab really is a larger version of the Galaxy S,” said iSuppli principal analyst Andrew Rassweiler. “While the design approach makes the Galaxy less expensive to produce than the iPad 3G, its screen resolution and size are not at the same level as the iPad.”

However, the Tab also has some features the Apple rival lacks, such as a gyroscopic MEMS sensor for gaming functions, Flash support and a secondary, front-facing camera. Both the Tab and the S use the same 1GHz Hummingbird processor and Infineon baseband, and have many other elements in common – though not the screen, which is LCD-based. Better availability of Super AMOLED and larger screens should allow Samsung to offer a tab- let next year with its trademark super-bright technology.

So, Apple's huge buying power and efficient supply chain control usually give it an advantage over smartphone rivals, which do not have its broader product range adding to its economies of scale. In media players, for instance, Android vendors have so far failed to match the pricing Apple can put on iPod and iPod Touch, especially in a segment where higher prices are not shielded from the consumers by carrier subsidies. But in Samsung, maker of everything from TVs to netbooks to MP3 players – but not, until this year, credible smartphones - it has more than met its match. The Korean firm's activities stretch across the electronic products spectrum and in chips, screens and memory. This could be a battle of the giants that leaves the other smartphone/tablet majors sitting helplessly on the sidelines.

Copyright © 2010, Wireless Watch

Wireless Watch is published by Rethink Research, a London-based IT publishing and consulting firm. This weekly newsletter delivers in-depth analysis and market research of mobile and wireless for business. Subscription details are here.

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