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Samsung has also achieved surprising success with an even bigger phone, the Samsung Galaxy Note. Its 5.3-inch screen makes it somewhat awkward to hold to the ear, but customers don’t seem to mind, or perhaps they value the large screen and included stylus more.

Aside from design, Apple is inflexible in another way: by releasing a new phone only one per year, it lets the competition create new phones with features the iPhone doesn’t have and lets them go unchallenged, at least until the new iPhone comes out.

Apple’s schedule leaves the other ten or nine months of the year wide open for everybody else,” says Llamas.

For instance, the newest Samsung phones can use the latest high-speed data networks in the U.S., and it can act as smart “credit card” at payment terminals in stores, two features the iPhone doesn’t have.

Samsung times its product launches to take maximum advantage of the lull in iPhone sales that usually precedes the launch of a new model. The S III went on sale in Europe in May and in the U.S. in June.

The rest of the competition is in disarray, and hasn’t been able to capitalize in the same way on Apple’s rigid release schedule and conservative design. Nokia Corp., until recently the world’s largest phone maker, is in sharp retreat and is conducting a complete revamp of its smartphones. Research In Motion Ltd. is stuck with outdated software for its BlackBerrys at least until it launches a new operating system next year. HTC Corp. of Taiwan is suffering from marketing missteps in the last few years. LG Electronics, another Korean company, hasn’t been able to keep up with Samsung when it comes to high-end phones, or with cheaper manufacturers on the low end.

Samsung, LG and HTC all use Google Inc.’s Android operating system, which is seen as the main alternative to Apple’s own software. But Samsung is emerging as the company that’s able to turn Google’s free software into profits.

Samsung is the only company that didn’t really buckle under the weight of the iPhone 4S. Good, solid devices and good, solid marketing behind them,” Llamas says.

Analysts now expect the new iPhone to arrive in September or October, probably with a slightly bigger screen. Sticking to one screen size has served Apple well, Baker says, but he sees the company moving with the times, as it’s done many times before.

“When they have the reputation and the brand loyalty that they have, you don’t have to be the first to market” with new features, Baker says. “You don’t have to take that risk.”