They do need to do something big and bold to compete with a lot of the other phone companies doing very well. This is a time where the coolest technology sells well, and if you don't continually produce more things that are bigger, better, cooler than whatever you have already, you then fall behind.
Yes, Samsung is losing the battle of the smartphones to Apple, because Apple's PR is so much better even if the products are not. Consumers are going with the hot trend, not with a straight-up comparison between phones. Apple phones are sexier, and buyers are not going to let the facts talk them out of purchasing them. Looks are everything.
I don't think Samsung is losing the battle for smartphone customers. They are selling more phones than ever, they are just selling them for less money per phone. I think people have been holding off buying Samsung phones until the new iPhones have come out, and will now start buying the more expensive Samsung models again.
I do think Samsung has a lot of competition in the smartphone industry today, but that does not mean they are losing the battle. They have come out with some very good smartphones, with great features that I believe are equal to, and many people believe are better than their competitors.