Samsung Electronics Co., facing slower demand for smartphones, will release a new device with a larger 5.2-inch screen and sharper display than the current Galaxy S4, according to a person with direct knowledge of the matter.
The new phone, with an improved battery and camera, will be released about the same time as an upgraded Galaxy Gear smartwatch, the person said, asking not to be identified because the specifications aren't public. Samsung may start selling the new phone for less than previous models in the S series after encouragement by at least one wireless carrier, said a second person familiar with the matter.
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Samsung is adding features to the latest version of its most-popular device as it tries to fight stalling growth for premium smartphones, new models from Apple Inc. and a plethora of Chinese competitors selling devices for as little as $100. The world's biggest smartphone maker is releasing its new phone, which may be called the S5, after sales of the predecessor S4 unveiled last year fell short of analyst estimates.
"For me, better specs don't cut it," Roberta Cozza, an analyst at Gartner Inc., said in an interview. "They need to find a way to get users to pick the Samsung brand across different types of devices to better compete with Apple."
Shares of Samsung fell 0.4 percent to 1,290,000 won at the close of trade in Seoul, extending its decline this year to 6 percent. The stock dropped 9.9 percent last year, its first annual decline since 2008.
Asia's biggest technology company plans to debut the device at the Mobile World Congress next week in Barcelona. It has invited journalists to an event called "Unpacked5" scheduled for 8 p.m. on Feb. 24.
Sul Jung In, a Seoul-based spokesman for Samsung, declined to comment on specifications of the device.
Samsung studied the possibility of using eye-scanner technology in the new phone for the first time, Lee Young Hee, executive vice president of the mobile business, said in a Jan. 6 interview. Sales of the company's marquee S4 slowed after the September release of Apple's iPhone 5s, which includes a fingerprint-identity sensor.
The Suwon, South Korea-based company will focus its advertising for the new phone on improved security features, an upgraded camera and integration with wearable devices like the Galaxy Gear, one of the people said. Samsung wants to position the phone on the high end of the market against competitors including HTC Corp. with its One series, the person said.
"Although the high-end market is slowing, Samsung, which dominates the premium market with Apple, will continue to release S-derived products," said Jae H. Lee, a Seoul-based analyst at Daiwa Securities Group Inc. "That's still where most of the profits will be found."
Samsung hasn't given carriers a selling price yet amid a debate about whether the new phone should be cheaper than previous S models. A Galaxy S4 device with 16 gigabytes of memory sells for $199.99 at Verizon Wireless with a two-year contract, according to the carrier's website.
Vodafone Group Plc. in the U.K. offers the S4 from 99 pounds ($165), depending on the service plan. A version of the S4 is available in Hong Kong through China Mobile Ltd. for a subscription price of HK$4,580 ($591), according to its website.
Samsung, which sells about one of every four mobile phones globally, saw its shipments and market share fall in the fourth quarter of 2013 from a year earlier, according to IDC data released Jan. 27. Samsung shipped 112 million mobile phones in the quarter, down from 113.6 million units a year earlier.
Its shipment market share declined to 22.9 percent in the fourth quarter from 23.5 percent a year earlier.
Since its release in April, Samsung has sold 63.5 million units of the S4, which features a 5-inch screen and 13-megapixel camera, according to the median estimate of three analysts surveyed by Bloomberg News. That compares with 65.6 million for the predecessor S3, according to the analyst survey. Samsung doesn't disclose shipment data for individual devices.
Apple sold 51 million iPhones in the December quarter after new versions went on sale in September. Last month, the Cupertino, California-based company started selling phones through China Mobile, the world's largest carrier with 767 million subscribers.
Lower sales of Samsung's marquee device contributed to its slowest profit growth since 2011 in the three months ended Dec. 31, with net income rising 5.4 percent to 7.22 trillion won ($6.8 billion). Operating income at the mobile unit, the company's biggest profit driver, was 5.47 trillion won, little changed from a year earlier and down from a record 6.7 trillion- won profit in the quarter ended Sept. 30.
--With assistance from Cornelius Rahn in Berlin. Editors: Michael Tighe, Robert Fenner
To contact the reporters on this story: Jungah Lee in Seoul at jlee1361bloomberg.net; Marie Mawad in Paris at mmawad1bloomberg.net
To contact the editors responsible for this story: Michael Tighe at mtighe4bloomberg.net; Kenneth Wong at kwong11bloomberg.net