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Samsung debuts wraparound Note to fend off big-screen iPhones

A visitor tabs on the display of a

A visitor tabs on the display of a Samsung Galaxy Note Edge Wednesday, Sept. 3, 2014, during an event at the IFA, one of the world's largest trade fairs for consumer electronics and electrical home appliances in Berlin, Germany. Credit: AP

Samsung Electronics Co. unveiled a pair of Galaxy Note smartphones, including one with a display extending down the side, as the No. 1 seller tries to fend off Apple Inc.’s push into large-screen devices.

The screen of the 5.6-inch Note Edge extends beyond the front of the phone, allowing users to read messages, news and stock tickers from an angle. The Note 4, the latest version of Samsung’s marquee 5.7-inch device, features an upgraded display and improved camera, Samsung said at the debut event Wednesday in Berlin, Germany. The company also showed off a virtual-reality headset, developed with Facebook Inc.’s Oculus unit, and a new smartwatch.

The world’s biggest smartphone maker needs the new Notes to be hits after the muted reception for its Galaxy S5 triggered a slide in earnings and provided opportunities for low-cost producers to surpass its sales in China and India. Apple is to introduce two new iPhones on Sept. 9: one with a 4.7-inch screen and another with a 5.5-inch display, people with knowledge of the plans have said.

“Samsung is the creator of the bigger-sized smartphone market in the high-end space, and it did pretty well until now because there were no players who can possibly compete against it,” said Lee Jae Yun, a Seoul-based analyst at TongYang Securities Inc. “The prolonged concerns over the new iPhones are finally about to be realized.”

The Note 4 that goes on sale next month features higher definition resolution than previous devices, three microphones that can cancel noises during recording, and the ability to capture group self-images within a 120-degree view. It also includes a 16-megapixel camera.

The Note Edge will go on sale later this year.

Samsung also announced its new 2-inch Gear S wristwatch device with a curved display and built-in network connectivity for users to make calls and get text messages. It also has enhanced fitness features without the need for connection to a smartphone.

Apple will introduce a wearable gadget at next week’s briefing, a person familiar with the plan has said.

Suwon, South Korea-based Samsung developed more functions to be used with a stylus, such as text marking, to set the devices apart from big-screen competitors. Apple has eschewed the use of styluses in favor of touch screens since the first iPhone debuted in 2007.

The user base for the Note has been broadening beyond business-oriented users, Samsung said. The Note 4 will be priced similarly to the Note 3, while the Note Edge will be more expensive, Samsung said.

The new virtual-reality headset, which connects to the Note 4, will sell for less than $1,000. Samsung said it’s working with Hollywood studios and video-game makers, including Electronic Arts Inc., to deliver 360-degree shows and programs for the hardware.

Samsung is grappling with slumping earnings as chairman Lee Kun Hee, South Korea’s richest man, remains hospitalized after a heart attack in May. The mobile unit accounts for more than half of the company’s profit.

The company posted the smallest quarterly profit in two years during the three months ended June 30, mainly because of increased marketing costs for its cheaper smartphones amid competition from Chinese makers including Xiaomi Corp. and Lenovo Group Ltd.

Samsung was the only producer in the world’s top five to post lower shipments in that period, according to data compiled by Bloomberg Intelligence from IDC.

Xiaomi became the largest smartphone vendor in China, while Micromax Informatics Ltd. topped Indian mobile-phone shipments, according to data from research firms last month. In both cases, Samsung was overtaken as the largest vendor in the market.

The company may post its fourth straight drop in operating earnings in the quarter ending this month, according to analyst estimates.

“The problem in consumer electronics is if you lose scale, you have an impact on margins and Samsung’s brand is not as strong as Apple’s,” said Adnaan Ahmad, an analyst at Berenberg Bank who is the most accurate among the 49 analysts covering the stock for the past year, according to the Bloomberg Absolute Return Rank.

Both Apple and Samsung are facing a tougher environment in China, the world’s biggest market, as wireless carriers cut spending on phone subsidies that make devices more affordable and drive sales of new models.

Typically, Apple and Samsung sell their high-end phones to carriers for about $600 to $800 each. The operators then subsidize the price, with the biggest discounts usually offered in conjunction with the most expensive subscription plans.

China’s three state-run carriers may cut subsidies by as much as $3.9 billion this year.

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