Samsung Electronics said Thursday it could possibly reduce shipments of Galaxy S5 smartphones to SK Telecom (SKT) to penalize it for its "unauthorized" release of the firm's latest cellphone.
However, it remains to be seen if Samsung truly wants to opt for punitive measures, considering SKT is its largest vendor and any reduction in supplies could negatively affect sales of its latest device.
One casualty in this brouhaha is Samsung's mobile CEO Shin Jong-kyun, who had officially denied reports about an early launch Wednesday. Shin's denial proved to be wrong in less than 24 hours.
The launch was scheduled for April 11 but SKT preempted this, prompting KT and LG Uplus to start selling S5s as well. SKT took the risk because it was scheduled to enter a 15-day business suspension from April 5 so sticking to Samsung's plan would have meant big losses.
"SK Telecom didn't get approval from us. We are seriously reviewing the possibility of disadvantaging SK for breach of trust," a Samsung executive said.
SKT said it had started selling the latest model to its local customers, Thursday. A few hours later KT and LG also said that the device was available at their outlets.
The suggested retail price of the S5 is 866,800 won without subsidies.
Samsung Electronics spokesman Benjamin Wonho Lee said the company regretted SKT's decision.
"An SK Telecom executive admitted it released the device earlier than scheduled without permission from Samsung Electronics," said Lee.
SKT said it will provide a 100,000 won discount to all customers who purchase the S5 until May 19, adding it will launch promotional campaigns to attract more customers ahead of its business suspension. During the suspension, it cannot sign up new customers.
The official global launch date of the S5 was set for April 11 in 150 countries.
Samsung's Shin didn't respond to an inquiry by The Korea Times over the early release by SKT.
Samsung had provided SKT, KT and LG with a limited number of handsets for marketing and pre-sales activities.
Following the early release, Samsung decided to cancel its official launch events in Korea and other markets, which will cause trouble for the firm's global marketing of the S5.
SKT officials said they understand Samsung's disappointment but the decision was inevitable after the government imposed the sales ban on it for offering illegal subsidies.
But some analysts say this "development" is a highly-organized tactic set up by the two companies to promote the S5 as the device is receiving a lukewarm response due to its lack of "stunning features."
"Whether the S5 will be a roaring success is hard to predict, but we believe with 8 months of sales and a hurdle of only 5.6 million per month to beat the sales of the GS4 this year, the base is not as bad as people think," Bernstein Research said in its latest ACE Report.
"In fact, we conservatively assume flat high-end smartphone shipment growth for Samsung this year," it added.
The S5 has a 5.1-inch full high-definition OLED display using active-matrix technology. It features a heart rate sensor fitted under the rear-facing camera, which has been upgraded from 13 megapixels to 16 megapixels, Samsung said.