Jul 16, 2014 07:38 PM EDT
Samsung Loses Ground in Smartphone Market to Apple, Cheaper Rivals

Samsung is losing ground in the smartphone market to cheaper Chinese rivals and to high end competition like Apple Inc, according to a new survey, which is bad news for the Galaxy maker as Apple prepares to release its next-gen iPhone 6 device this fall.

Samsung reported its second-quarter earnings guidance was far weaker than expectations and is currently on track for its worst quarterly profit in 2016 in China.

Research firm Counterpoint's survey of 35 markets accounted for 90 percent of global sales. They determined that sales for the eight-month-old iPhone 5S stood at 7 million as of May, compared to 5 million for Samsung's Galaxy S5, according to Reuters.

The S5 was in just its second full month of sales after a late March release.

The firm said that the Galaxy S5 seemed to be doing worse than the S4 during its early launch against the iPhone 5, as each sold about 7 million units a month, according to Reuters. They measured retailer's sales to consumers instead of typical industry data that looks at shipments made by the manufacturer.

Galaxy S5 sales likely remained at around 5 million units in June, according to Tom Kang, Seoul-based analyst for Counterpoint. He added that the Galaxy S5 fell short of market expectations in terms of display quality and by using a plastic case, according to Reuters.

"They made one mistake, one product that didn't hold up to expectations and they are paying the price," Kang said, according to Reuters. "They will have to move forward and leave behind what has failed and focus on the next product."

Samsung declined to comment on the data or disclose shipment figures for the S5.

A Samsung executive said back in April the company expected the new device to outperform its predecessor.

"We will strengthen our product competitiveness by reinforcing our premium brand reputation, powerful product line-up, and cutting-edge technology," the company said in a statement, according to Reuters.

Analysts believe most of Samsung's new products, like the S5, don't offer enough to attract customers to pay a premium price over cheaper options.

"Most major smartphone brands worldwide are battling brand fatigue at the moment," said Strategy Analytics analyst Neil Mawston, according to Reuters. "Consumers love their smartphones but almost all hardware, software and apps now look, feel or cost the same."

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