Samsung’s swelling crisis with its flagship Galaxy Note 7 has left millions of premium smartphone buyers at crossroads, looking for an alternative. The obvious candidate is the iPhone 7, although Google Pixel is fast grabbing a lot of eyeballs as well. However, if you’ve tasted the Apple, you’ll agree that nothing else comes even close.
Earlier this September, reports flooded in of Note 7 phones going up in flames (literally!). Samsung decided to recall and replace each one of the devices, despite the numbers running into millions. Unfortunately, those replacement phones also started catching fire. With no more cards left to play, Samsung has ordered its retailers to stop selling all Note 7 phones. Meanwhile, investigations are underway to understand why the new phones were being affected by the same problem.
Officially, the Note 7 has been discontinued and banned from all United States passenger flights. This fiasco has cost Samsung around $2.3 billion, essentially erasing “all the mobile business profit” from the company’s revenue for the quarter.
Though Samsung believes that distressed customers will shift to another of its phones, (maybe Galaxy S7), a report from KGI believes that Apple and Huawei may be the biggest benefactors. Ming-Chi Kuo of KGI estimates that around 5-7 million Note 7 orders will convert into iPhone 7 orders, with most of them choosing iPhone 7 Plus, owing to its dual camera.
Apple will be able to convert about 50% of the customers, and the ones remaining will be shared among Android manufacturers like Huawei and Google. KGI also says that Note 7 users have lost faith in the Samsung brand and will tend to like iOS and its camera features, making the new iPhone sale more attractive than it would have been.
Owing to its foothold in China and Europe, Kuo believes that Huawei will enjoy the second biggest piece of the cake from Note 7’s failure, right behind Apple. With the forthcoming launch of the Mate 9 in the fall, the analyst looks at Huawei as the next best alternative for Note 7 users who are leaving Samsung but looking to remain in the Android family.
Coming back to iOS devices, while Kuo believes Apple will be the major benefactor, the analyst also says that the benefits will be “largely reflected in raised forecasts,” and not so much in actual iPhone shipping numbers. Also, the impact of the Note 7 failings may not extend beyond a couple of months; however, another round of similar faults would destroy the Samsung brand as a premium phone manufacturer.
Ultimately, discontinuing Note 7 is unlikely to have a lasting impact. That is if Samsung does not repeat the mistake with the Galaxy S8, which is expected to enter mass production in Q1 of 2017. In the aftermath of the Note 7, Samsung should tread lightly and do all their due diligence before launching a phone into the market.
