Samsung offers freebies with Galaxy S5 to fend off rivals

Samsung Electronics, facing more competition from Apple and Xiaomi, is cranking up incentives for its Galaxy S5 to as much as US$600 in freebies to defend its place as the world's largest smartphone maker.

As the marquee device from the South Korean company made its global debut yesterday, customers were offered incentives such as PayPal vouchers, a LinkedIn premium account and at least four fitness-related apps. It is the first time Samsung has offered incentives to buyers of its top-selling S series of smartphones.

Samsung is fighting to make its phones stand out in the market against new iPhones and up-and-comers such as China's Xiaomi and Coolpad. The strategy may force rivals to lift incentives or lower prices, meaning a potential profit squeeze throughout an industry that has seen the fall of once-dominant producers Motorola and Nokia. Samsung's operating profit has fallen for two consecutive quarters.

"Samsung must do whatever it takes to maintain its global consumer electronics leadership," said Neil Mawston, director of global wireless practice for researcher Strategy Analytics. "Previous failures like Motorola have shown in the past that once you lose your grip on top spot, it is a very long and painful process to get it back."

The S5 enters a smartphone market where global growth is expected to slow to 6.2 per cent in 2018 from 19 per cent this year, research firm IDC said in February.

Samsung expects S5 sales to reach 10 million units within 25 days based on pre-orders from global wireless operators, the Seoul Economic Daily reported.

While Samsung sold about one of every three smartphones globally last year, Chinese competitors Xiaomi, Coolpad, Huawei and Lenovo gained traction and stalled some of Samsung's growth. Xiaomi expects its sales to grow fivefold to 100 million phones next year.