Why This Apple Analyst ‘Chickened Out’ of Buying a Samsung

Monday, 29 Apr 2013 | 11:10 AM ET
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Monday, 29 Apr 2013 | 10:22 AM ET
Long-time Apple fan Brian Marshall, ISI Group analyst, explains why he changed his mind and did not buy Samsung's Galaxy S4 this weekend.

In a note to clients Sunday, ISI analyst Brian Marshall explained how he got "cold feet" while trying to replace his Apple iPhone 5 with a Samsung Galaxy S4. He ultimately "chickened-out" on the purchase while at Best Buy.

"I did feel pretty guilty at the register and just decided against it," Marshall told "Squawk on the Street" Monday. "I wanted to make the transition, but I couldn't do it at the end of the day."

Marshall said that his initial decision to switch to a Samsung was based on his desire to have a larger screen to make typing easier. He pointed out that the high end of the market tends to have 5-inch screens, while the iPhone 5 currently has a 4-inch screen. However, when faced with the challenges of switching from Apple's all-encompassing ecosystem across multiple devices, it just wasn't worth it. "There are just a lot of hoops I'd have to go through. I just didn't want to make that platform transition," he said.

"(Investors) are basically saying the same thing," he added, "with such an invested installed base, it's a very difficult platform to migrate off of."

(Related: Why Apple's Still a 'Buy': Sacconaghi)

In the note to clients, Marshall described himself as "an avid user of virtually every Apple product created since the volume ramp of the iPod in 2004."

However, this tendency is not going to protect Apple market share forever. "Ultimately you can see Apple losing ground on the smartphone side. They're already losing share at the high-end," he said. "The reason is that they're not leading on a hardware design standpoint anymore. If we get to 6-months down the road and their main product is a 5S, I think they're going to cede more share and people will be more willing to bridge that gap. It's a matter of quarters, not years."

(Related: In the Apple-Samsung Fight, the 'Arms Dealers' Win)

Marshall said that Apple needs to "get back to the basics" and build the best hardware platform and software ecosystem on the planet. "Ultimately, their hardware design is no longer superior so I think that's what's kind of broken down here," he said.

Marshall is currently bullish on Apple, with a price target of $600 and a "strong buy" rating on the stock. Baked into this target are two assumptions: the company will roll out a new, low-cost iPhone to penetrate the international markets and that they will compete at the high-end of the smartphone segment with a 5-inch format device.

These assumptions, Marshall added, were "conservative."

— By CNBC's Paul Toscano. Follow him on Twitter and get the latest stories from "Squawk on the Street" @ToscanoPaul


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