What a difference threemonths can make. At the end of August, Apple seemed on top ofthe world. Fresh off a resounding $1.05 billion U.S. legalvictory over arch-foe Samsung Electronics,the company was gearing up to launch the fifth iteration of itsiconic iPhone.
Just a week prior, its market value had surpassedMicrosoft Corp's and it became the most valuabletechnology company in history.
That was then. Since winning a landmark U.S. patentinfringement case in August, its stock has dived 18 percent,wiping $108 billion from its value. But the shares of defeatedparty Samsung have surged, rising 16 percent.
The dramatic reversal has sparked raging market speculation.
Some pundits say concerns are growing about the seeminglyinexorable advance of Google Inc's Android, the rivalsoftware championed by Samsung. Others say fears about highercapital gains taxes have prompted investors made rich by Apple' stock-price growth to sell.
But it is the Apple-Samsung rivalry that defines a globalmobile device industry with a growing list of strugglingplayers. Together, the two mobile juggernauts account for morethan 1 in 2 smartphones sold globally.
Analysts say Samsung is beginning to shed its aura as a"fast follower" and becoming a serious innovator, while Applehas failed to deliver on a truly seminal product in years - theoft-rumored Apple TV remains a well-honed rumor.
"Apple's actions have started to appear as if innovation isslowing and they're defending turf with a zero-sum market viewrather than continuing to innovate as a world-beating leader,"said Tony Nash, managing director at IHS, a business informationprovider.
The clash of the gadget titans underscores a broader battlebetween Apple and Google's increasingly popular Android mobilesoftware, now installed on about two out of every threesmartphones sold.
But some Asian analysts also point to Samsung's verydifferent business model as helping it get a leg up on Apple.
The iPad maker's outsourcing structure provides fattermargins, but cedes some control to an army of suppliers, whileSamsung's competitiveness is driven by keeping most of itsmanufacturing in-house.
And while Apple focuses on a few high-end mobile devices,Samsung's product breadth helps it scoop up new, less affluentusers who can then be driven towards higher-margin devices, suchas the phone-tablet combo Galaxy Note.
"In Asia, Samsung is still in the stronger growth positionwhen it comes to smartphones - bringing large-screen models tothe masses, re-introducing the pen with its Galaxy Note seriesand also, at the lower-end, with its entry-level Galaxy Ydevices driving emerging markets like Indonesia and India," said
Melissa Chau, Singapore-based research manager at IDC.
No one is writing off Apple, still the world's most valuablelisted company and expected to chalk up 27 percent revenuegrowth to almost $200 billion in fiscal 2013 - about level withSamsung.
"There have certainly been missteps at Apple ... but if welook at what's been achieved in the year since (co-founderSteve) Job's death, there are things that keep their competitorsquaking in their boots," said Rachel Lashford, ManagingDirector, Mobile and APAC, at consultancy Canalys in Singapore.
Among its strengths, she cited unprecedented demand aroundnew launches, the expansion of content on iTunes and the AppsStore, a possible move to product updates twice a year, effortsto improve parts supply and manufacturing, the dogged legalpursuit of Samsung and cash reserves of more than $120 billion.
Its gross margins of above 40 percent are double Samsung's.
But the South Korean company is now beginning to generatesome buzz with recent improvements in its line-up. This week,news emerged that it is likely accelerating the launch of itsnext-generation flagship Galaxy smartphone - which sports anunbreakable screen.
Codenamed "Project J," the Galaxy S IV could be released asearly as March or April, according to leading industry analystsand tech blogs. With smartphones increasingly looking alike, anunbreakable screen could be a big selling point for the Galaxyover the iPhone.
"Samsung's richer product line-up and vertically integratedsupply structure are among its strongest advantages over Apple'ssimpler product range and strength in software," said KimYoung-chan, an analyst at Shinhan Investment Corp in Seoul.
Samsung is estimated to have shipped close to 56 millionsmartphones in July-September, more than double the number ofiPhones, and analysts expect it to sell around 30 million moresmartphones than Apple this quarter.
The South Korean firm's shift comes as its Cupertino,California-based rival suffered from some missteps in its iPhone5 mapping app, supply constraints that have prompted deliverydelays and allegations of employee abuse at supplier plants inChina.
Charles Moon, Singapore-based principal analyst at InformaTelecoms & Media, a research consultancy, sees these as a signApple is adjusting to maturing markets.
"A completely offensive strategy with uncontested gains area thing of the past," he said. "Apple is not positioned well atthe moment following a couple of disappointing quarters andcontinued negative news flow.
"Regardless of what happens (in the court ruling), Samsungand Android are winning where it counts - outside the courtroom- and this is likely to go on unless Apple can continue toreinvent itself. Very difficult, considering how far they'vecome, but not impossible. They've done it before," he added.
In the key battleground of China - the world's No. 1 cellphone market - Samsung and Android devices in general appear to be making headway against pricier Apple gadgets.
Third-quarter data shows Apple slid to sixth place in China, its largest market after the United States. Samsung kept top slot, according to research firm IDC, which estimated the Chinese smartphone market at a record of more than 60 million in July-September.
IDC analysts forecast a rebound for Apple with this month's iPhone 5 launch there, but it has so far failed to crack the country's largest carrier by far, China Mobile Ltd .
Apple's "loss of market share and of opportunities like a stalled China Mobile agreement are notable and, potentially, show some strengths of an integrated hardware-led model of players like Samsung against the comprehensive hardware-software ecosystem model of Apple," said Nash at IHS.
"This competition is far from over and my hope is that it forces very strong and continued innovation from Apple, Samsung and others."