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Why Apple Analysts Are Not Worried About the Samsung Galaxy S8

Samsung unveiled its new line of Galaxy S8 smartphones on Wednesday, featuring larger edge-to-edge displays, wireless charging, and facial recognition security for unlocking.

Those are all features rumored to be coming possibly to the next iPhone, as well.

Analysts on Wall Street and across the country tracking the smartphone market judged that the newest Samsung devices would pose only a limited threat to Apple, despite a four- to six-month head start before the next wave of updated iPhone reaches the market. Apple’s stock has gained 3% over the past five days, even with the arrival of Samsung’s updated product line.

Even if the Samsung phones have beaten the iPhone to market with desirable new features—like larger, edge-to-edge screens—Apple’s strengths in software and apps should maintain its attraction for many consumers, Cowen & Co analyst Tim Arcuri noted on Thursday. And that’s taking into account rumors that Apple’s product line may add a $1,000 device that Arcuri and other analysts have dubbed the iPhone 10 in accordance with the 10th anniversary of the iconic smartphone.

“While S8 has most specs similar to iPhone 10/X (at ~15-25% lower price), suggesting a trend of smartphones becoming less differentiated, we note that AAPL is never winning on specs,” Arcuri wrote, adding Apple’s proprietary processor chips, iOS software and “better user experience, and strong ecosystem remain its moat.”

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Samsung appears to be trying to get ahead of some of Apple’s rumored design changes, analyst Rod Hall at JP Morgan Chase noted, pointing to the edge-to-edge screen as well as the facial recognition and iris scanning security additions in the Galaxy S8.

“It seems that Samsung attempted to increase the security options on this phone possibly in response to what they believe Apple’s plans are for the next iPhone,” he wrote on Thursday.

One issue helping Apple (AAPL) until its new phones are ready is Samsung’s decision to raise the base prices of flagship models by $100. So an entry-level Galaxy S8 will cost $750, which is $100 more than the iPhone 7.

The higher price, which may have been necessitated by including the more costly displays, “feels like a big risk,” Jan Dawson, chief analyst at Jackdaw Research, wrote.

“It feels like Samsung is competing with what it expects Apple to launch later in the year rather than what’s in the market today, and that’s dangerous, because for at least the next few months Samsung will competing with cheaper iPhones, LG smartphones, and many others,” Dawson wrote.

The new exterior designs from Samsung and those coming soon from Apple should help convince more consumers to upgrade this year, according to Jefferson Wang, senior partner at IBB Consulting. But with the two competitors moving in the same direction, the new models are not likely to prompt much brand switching.

“If the rumors are true, when the Apple tenth anniversary phone launches this fall, we’ll see Apple move away from a form factor it has relied on for the past three years,” wang writes. “A curved display and completely clean front interface is rumored. From this standpoint, Samsung and Apple will likely have similarly-designed flagship offerings. IBB does not expect a considerable number of either brand’s fans to defect to the other in the 2017 upgrade cycle.”

Samsung’s Note 7 debacle and recall surely helped boost iPhone sales at the end of last year, Michael Walkley, an analyst at Cannacord Genuity, noted two days after the Samsung S8 event. And while the S8 may blunt some of that iPhone sales momentum, the upcoming iPhone upgrades should be compelling enough to swing consumer attention back to Apple’s products, he predicted.

“While the new Galaxy S8 products should slow Apple’s momentum in winning new Android customers during the June quarter, we anticipate Apple’s new iPhone 8 will compete extremely well with the new Galaxy S8, leading us to increase our iPhone estimates,” Walkley wrote. The installed base of active iPhone users should grow to 635 million by the end of this year from about 570 million at the end of 2016, he said.