Can Apple Beat Samsung at its Own Game?

The success of the Galaxy Note has made Samsung (SSNLF.PK) an early winner in the phone-tablet hybrid, or phablet, battle, according to analysts at Barclays Capital, though Apple (NASDAQ:AAPL) will likely pose a big challenge soon.

The phablet phenomenon is “changing the competitive dynamics of the mobile device market,” analysts including Dale Gai, SC Bae, Yuji Fujimori, and Kirk Yang wrote in a note to investors on Wednesday. The analysts predict that the device will be the main driver for technology migrations in the months and years to come. While the success of the device has brought “more bad news for the [Microsoft (NASDAQ:MSFT)] PC/Win8 industry,” another possible impact is that Apple would be forced to offer a larger screen on future iPhones.

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“At last, we expect some strong competition for the iPhone in 2013 with the rise of phablets,” the analysts wrote. “In response, we expect Apple to come out with both a larger- and smaller-screen phone in its product line-up by 2014; with the bigger screen version likely to be 4.5 inches and possibly 50-100 million units per year.”

But powered by the Galaxy Note, Samsung is on track to take 40 percent of the device market share this year. Future Note models, the eventual Galaxy S4, and the seven-inch Galaxy Tab will “further strengthen Samsung’s leadership in phablet devices.”

The phablet market may see as much as 70 percent compounded annual growth through 2015 — going up to 402 million units from an estimated 84 million units shipped last year, the analysts predict. Its definition will also change.

“In our view, as the screen sizes of mainstream high-end smartphones (excluding the iPhone 5) in the second half of 2012 have all migrated to displays of 4.6 inches and above, we believe the term phablet should apply to all crossover mobile devices, ranging from mainstream smartphones (4-5 inches) to small-size tablets (7-8 inches),” they wrote.

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