Apple has so far focused almost entirely at the high end of the market, only ever offering one flagship model of iPhone and selling previous years' models as its entry level options. That positions Apple very similar to the point it was when it only sold one version of the iPod, just prior to releasing the iPod mini and nano models that rapidly ate up the lower end of the MP3 market.
Apple is widely expected to release a new lower priced iPhone model later this year, aimed directly at eating into the middle tier of smartphone sales.
Reuters noted that "mid-tier models," currently "aggressively" targeted by "Chinese rivals" is "a segment in which Samsung has relatively weak positioning," noting that the mid-tier segment "accounted for less than 15 percent of Samsung's total shipments last year."
Samsung also faces the threat of a broad U.S. import ban over multiple patent infringements, and two U.S. patent cases that involve monetary damages still being determined.
Apple's significant new redesign of iOS 7 will also force Samsung to either come up with its own parallel refresh or end up looking dated with a variety of features and app designs and its an overall appearance taken directly from previous versions of Apple's iOS.
As much money as Apple has, I'm a little surprised they didn't target that segment a bit sooner. They could certainly afford to concentrate on both. From the outside it looked like they were just kicking back.
They could also concentrate on more creative marketing. Samsung started a very effective campaign to make Apple devices appear outdated and mostly attractive to older people, while grabbing the younger market with (supposedly) more advanced and "hip" models. While not a true comparison, it was still a very effective campaign. I could see the effect on people I know.
They have been working on manufacturing issues of late that rally are consuming a lot of resources and must lead the next products. Getting out from under Google and SAM have consumed a lot. That is coming to an end soon. No Maps No Search no SAM man is the game right now.