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Samsung's Galaxy S4 isn’t a game changer. So what?

Lex is a premium daily commentary service from the Financial Times. It helps readers make better investment decisions by highlighting key emerging risks and opportunities.

Just how many games need changing in the smartphone world? Every time a new model is launched, opiners weigh in on whether it meets that standard. Samsung suffered its worst one-day drop in five months on Friday, down 2.6 per cent, after its hotly awaited Galaxy S4 was considered not to have done so. Perhaps it was the widely-panned theatrical skits it used to show off the phone's capabilities. So please, don't roll your eyes if you are reading this on a screen: an S4's eyeball monitoring technology would presumably read that as a signal to flip to another program. Still, when a phone that also translates between nine languages while monitoring humidity and heartrate is not considered a gamechanger then the question needs changing. It is far more interesting to ask what phones mean to Samsung.

The short answer is they mean a lot. Phones made up about half of the company's sales last year. Over the past four, the company has sold 1.2 billion mobiles, according to Gartner research, and by the end of last year, more than half were smartphones. Then there is public perception. The number of stories mentioning Samsung in the U.S. press have risen by about a quarter each a year over the past three. Stories mentioning Samsung and Apple meanwhile, have risen more than fourfold. The sort of brand recognition created by that coverage is huge: Samsung's overall brand value, according to the FT's annual survey, had risen by a quarter in the two years to 2012. Not all of that can be down to its sponsorship of London's Chelsea football club. Sales of the Galaxy S3, Samsung's current top product, have passed 40 million and even after the iPhone 5 launched in September, Samsung still sold three smartphones for every two Apple ones.

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Samsung also has the market momentum. Anyone holding Apple and Samsung for the past three years has gained about 90 per cent on each. But those who only became Samsung fans after last year's well-received Galaxy S3 would have gained a fifth while Apple is off a quarter since the iPhone 5. No phone since the first iPhone has actually changed the game, but they do affect investor mood.

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