Samsung Electronics may be having the same problem Apple has

Samsung said on Friday that it expected weaker profit and revenue, which analysts attributed to slowing sales of high-end smartphones. This is a trend that also bedevils Apple, its main rival. Samsung aim its Galaxy models at the top end of the market. Apple sells its iPhone to these customers, too. And while sales of smartphones continue to grow over all, the rate of increase for the more expensive devices has been easing in recent months. In recent days, BlackBerry and HTC, the Taiwanese phone maker, have also reported difficulties selling advanced smartphones.  According to comScore (a market research firm), In the United States, more than 58 percent of adult consumers who own cellphones own a smartphone, only three years ago, it was 20 percent. The real problem may be that much of the growth in smartphone sales in coming years will be at the lower end of the market, where Chinese manufacturers are gaining share. Samsung simply does not have the most appealing models for those consumers. As smartphones become increasingly commoditized, prices will fall and profit margins will shrink.  “The concern is the future of the smartphone market, which is already saturated at the high end,” said C. W. Chung, an analyst at Nomura Securities. “The smartphone industry may be becoming more like the PC industry,” in which consumers make their buying decisions mostly on price, despite attempts by manufacturers to differentiate their products. Samsung said it expected to post an operating profit of 9.5 trillion won, or $8.3 billion, for the second quarter, a 47 percent increase from a year earlier. Investors were not impressed. Analysts had been modeling for $51.4 billion in sales and $9.3 billion in operating income. As a result, shares fell nearly 4% on the figures. After losing 13% of their value in June, Samsung is now 20% off its peak.

Samsung is currently experiencing exactly what Apple (NASDAQ: AAPL  ) has been going through over the past 10 months. The Mac maker also put up its own all-time record quarter in terms of revenue, iPhone units, and net income, yet shares plunged 11% in January. Both companies face lofty investor expectations that are becoming increasingly difficult to meet. Big numbers alone just won't cut it anymore. Apple investors weren't satisfied with the 5 million iPhone 5 units that were sold during launch weekend. Samsung investors think the company should have been able to ship more than 20 million Galaxy S4 units in the first two months. Analysts have continued to reduce estimates on the Galaxy S4, although Samsung doesn't regularly disclose unit sales or product mix. pple reports total iPhone units but doesn't detail product mix, either. ISI Group analyst Brian Marshall estimates that the iPhone 5 sold twice as fast as the Galaxy S4 at launch, hitting 20 million in unit sales after just 25 days.

The high end of the smartphone market is quickly maturing and reaching saturation, which is presenting headwinds for both Apple and Samsung. Apple is widely expected to release a mid-range iPhone model for the first time this year, while Samsung has long played a wide plethora of price points to rise to the No. 1 vendor by volume.

Samsung's mobile business contributed 74% of all operating income, underscoring how important its smartphone business is. Some analysts believe that the semiconductor component business is being underappreciated, as Samsung's vertical integration is a distinct competitive advantage.

However, Apple is reportedly moving as much component business as it can away from its largest rival and has inked a deal with Taiwan Semiconductor to manufacture future processors. That transition alone could hurt Samsung's component business to the tune of $5 billion in annual sales. The semiconductor segment represented 12% of operating income in the first quarter.

With Samsung's flagship Galaxy S4 launch in the rearview mirror and unit sales proceeding at a disappointing pace, Apple has an opportunity to win back investor favor when it launches new iPhones in just a matter of months. Additional information