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Apple vs. Samsung: Why Looks Matter

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Forget about microprocessors and dual cameras, it’s looks that matter the most when it comes to the heated battle between smartphone giants Apple (AAPL) and Samsung Electronics (005930.KR).

The Wall Street Journal has published an interesting feature story this morning on how 10 years after Apple launched the first iPhone, the smartphone war is now shifting to how a phone looks and feels.

How a smartphone looks now accounts for about half a consumer’s purchase decision, with the assessment formed in roughly one second, according to Charles L. Mauro, president of MauroNewMedia, a product-design research firm that has done consulting work for Apple and Samsung. Mr. Mauro says peer-reviewed research reveals aesthetics matter much more than previously believed, as older surveys pegged looks as influencing only 7% of a phone purchase.

Consumers are upgrading en masse: Global smartphone shipments rose 5.6% for the first three months of 2017 versus the year-earlier period—representing the first sustained growth in two years, according to market researcher IHS Markit . The uptick comes as a large number of consumers who have held on to their smartphones for two years—or more—are looking to upgrade their device.

It appears that Samsung is leading the latest round with its sleek and edgeless Galaxy S8.

The S8 is nudging the bar higher as Apple seeks to impress with its 10th anniversary iPhone this fall. For Apple to outdo Samsung on design, analysts said, it would need a new distinguishing feature, like a fingerprint sensor beneath the display rather than a physical home button.

Despite Samsung’s exploding Galaxy Note 7 debacle last year, its Galaxy S line of handsets has now been ranked the top smartphone on the market for two years in a row.

Samsung, at least for now, is turning the tables on Apple with phone quality, Consumer Reports concluded when it ranked the Galaxy S handset the top smartphone on the market for the second straight year, with design earning praise alongside battery life and camera quality on the latest incarnation, the S8. Bragging rights matter more than ever as each company introduces fresh devices this year and vies for some of the record numbers of smartphone owners due for upgrades.

And it isn’t just in the smartphone phone beauty contest that Samsung has edged past Apple. Samsung has also displaced Apple to become the world’s most profitable tech company.

Samsung shares have gained 67% over the past year as the electronics giant’s earnings surged on higher memory prices. The stock remains an attractive buy given it trades at just 8.6 times forward earnings – compared to Apple’s 15 times – and offers strong growth, as well as the potential for higher shareholder returns.

Source: barrons.com

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