Samsung Unveils New 'Phablet': Threat to Expected iPad Mini?

Samsung Galaxy 10.1 Note Phablet
Source: Samsung
Samsung Galaxy 10.1 Note Phablet

Apple might have scored a key courtroom victory against Samsung late last week, but the fight is hardly over between the two tech giants.

Samsung unveiled Wednesday the second generation of its Galaxy Note, a phone/tablet hybrid that saw its first incarnation sell more than 10 million units in just nine months. (Read More: Will Samsung Bounce Back With New Galaxy Note Phablet?)

That could put pressure on the Cupertino, CA-based Apple, which many analysts expect to introduce a smaller version of its iPad tablet sometime this fall. (Read More: What a mini iPad Could Do for Apple)

That pressure, though, isn't likely to bump Apple from its leadership position in the tablet space. And despite Samsung's headstart, analysts are unconvinced it will be able to take the lead.

"There are plenty of things that keep Apple up at night—This isn't one of them," says P.J. McNealy, founder of Digital World Research. "For the segment of the market they're targeting, they're the strongest brand out there."

The Note 2 falls into the burgeoning "phablet" category—a term used for touch-screen devices ranging in the 4.6-inch to 5.5-inch range. (The word itself is a fusion of phone and tablet.) And phablets are expected to be the next big battleground in the mobile world. ABI Research predicts shipments of the devices could reach 208 million by 2015.

Samsung was first to market with the original Note—but Apple's loyal customer base could quickly erase that advantage. And with whispers abounding that Apple not only plans a smaller version of the iPad, but will also increase the size of the iPhone's screen as early as next month, the long-looming fight is set to begin.

Samsung is counting on the Note to bounce back from its recent legal defeat. The original Note is not on the list of products Apple is seeking to ban, nor is the Note 2 likely to be added when it ships (which is expected to be in early October).

However, notes McNealy, Samsung's brand recognition in North America is stronger in the entertainment segment of the consumer electronics space. And other expected phablets, such as Amazon's expected update to the Kindle Fire and Microsoft's Surface tablet could prove a viable competitor as well.

"The reality is we're so early on that there's plenty of room for stratifying this market," says McNealy. "That's why everyone's still rushing into it…There's a big race on for second place in market share behind the iPad. And Amazon is certainly in the thick of that. They're the low-cost alternative to Apple. Amazon is the biggest threat right now."

Apple, of course, is not talking about the new iPhone or a smaller iPad. Officially, it hasn't even planned any press events for the coming months, though it's widely expected to announce at least one of those products on Sept. 12. (Read More: New Apple iPad Mini to Debut in October)

Historically, it has brushed off talk of a smaller tablet. In 2010, Steve Jobs lambasted 7-inch tablets saying, "this size isn’t sufficient to create great tablet apps, in our opinion."

However, in the recently concluded Apple-Samsung court battle, an email from Eddy Cue, Apple's senior vice president of Internet Software and Services, was entered into evidence stating that Jobs had become "very receptive" to the idea. (Read More: The Apple Email That's Likely to Worry Google, Amazon)

Jobs was also famous for downplaying markets Apple was considering entering in the near- to mid-future.

And with the next iPhone expected to increase its screen size to roughly 4 inches (versus the current 3.5-inch model), that could make it more attractive to potential Note 2 buyers.

Furthermore, Apple's recent court win could be especially beneficial, since Samsung (and other manufacturers) might be forced to alter their hardware or software designs—giving Apple's device time to expand its already sizable base.

"Apple's legal win against Samsung increases our confidence in iPhone 5 share gains over the next year, as many smartphone makers may need to re-consider software and design features incurrent or upcoming smartphones," says Katy Huberty of Morgan Stanley.