It's Not Just Apple: Samsung Looks to a 5G Future

We've heard more than once over the last several weeks about the kind of impact that 5G communications technology could have on Apple stock, with some suggesting it will be a major improvement to the company's futures, and others believing that the lack of it will hamstring Apple in ways we haven't seen since the iPhone emerged. One of Apple's biggest rivals in the field, Samsung, is looking to realize its own gains with 5G access.

Sharing the 5G Love Across a Range of Price Points

Samsung is looking to 5G as a potential way to help turn around some of its recent troubles. Samsung's earnings report, filed earlier today, revealed net profit that was down 38% over the same quarter in 2018.

Yet Samsung—along with Apple—expects that 5G will drive at least some demand for brand-new smartphones that are capable of interacting with the new communications standard. To that end, Samsung is looking to make a range of new devices that will allow customers to patch into the 5G standard, and do so at several different price levels.

Reports noted that Samsung is planning to add 5G capability to more of its Galaxy A line, which represents the low- to mid-range smartphone line. This won't impact its higher-end models, however, as these will continue to feature 5G capability. This is a move Samsung expects will spark further sales worldwide.

Expecting Some Major Growth

Adding 5G to more phones will certainly help matters, and Samsung expects this to help drive future sales. With more 5G service coming into play, and more mobile providers subsidizing 5G-capable devices, that should also help drive gains in the field.

Gains here would be welcome; in 2019, reports note, 5G smartphones were just 1% of the total worldwide smartphone shipment package. That number is expected to jump to 18% this year, however, as more locations get 5G access and more phones can actually take advantage of it.

With Apple outmatching Samsung on total smartphone shipments in the fourth quarter of 2019, it's clear that Samsung needs an inducement to get users back in the fold. The combination of new 5G connectivity and new 5G phones may be just the ticket for Samsung. It's even planning to release a new kind of foldable smartphone later this year, and that could help as well. Samsung is even looking to improve its fortunes on other sides of the 5G equation, as it sells 5G networking systems and smartphone memory as well.

This global approach will give Samsung an edge, as it's expecting 5G business to shrink as compared to last year in its home country of South Korea. It expects to make this difference up, and then some, on greatly expanded worldwide sales.

The Same Risks, And New Rewards, Apply

The problem for Samsung, however, is that it's going to run into much the same problem that Apple is looking at. We've seen projections for Apple stock range from up in a big way to down in likewise fashion, all because of the 5G rollout, which is looking spotty at best and sporadic at worst. Samsung will be subject to the same fates here; if the 5G rollout doesn't emerge as quickly as some hope for, then this year's smartphone sales will likely drag as customers delay purchases until 5G is more readily available.

Here's an interesting twist, though; Samsung may actually be poised to benefit more from 5G than Apple can thanks to the smart home concept. We all know that smart home technology requires a lot of bandwidth to run; being able to tell your house to turn on the lights when you're five miles out and actually expect it to happen requires a surprisingly complex process. One point that the reports didn't mention is that Apple doesn't exactly have a robust smart home presence. Sure, it's got the Apple HomePod and Siri along, and as we found recently it's got part of a division devoted to home, but Apple doesn't sell refrigerators. Samsung, meanwhile, does. Samsung also sells ranges and microwaves and a host of other home items, all of which can benefit from that smart home connection.

Apple's counting on 5G to drive smartphone sales. Samsung is too. But Samsung can put 5G to work in a great many more places, however, and this should give Samsung a much bigger upside potential when 5G rolls out in earnest.