Samsung appears to have had a major hit on its hands with the Galaxy Note 7, at least before it began recalling the gadget due to the potential of an exploding battery.
According to BayStreet Research, the Galaxy Note 7 was “off to an excellent start” in the United States when it was first released last month, enjoying 25 percent higher sales than its predecessor, the Galaxy Note 5 that was released at roughly the same time last year (Samsung did not release a Galaxy Note 6).
“This is very unfortunate for Samsung as the Note 7 was in a position to perform as well as the GS7/GS7E had in the first half of the year,” BayStreet’s Cliff Maldonado told FierceWireless. “We have now lowered our Note 7 forecast to ~60% of the Note 5 and are closely tracking how long consumer’s memories are regarding this unfortunate incident. Best case, this is similar to an automobile recall and quickly forgotten with the new / replacement item viewed as safer than before. Worse case, this is remembered like the quality of Siri or Apple Maps and very difficult for consumers to forget.”
In its latest report on the smartphone market, BayStreet said Samsung’s overall sales in the United States in the third quarter are down around 6 percent quarter over quarter to 7.2 million units.
Further, according to a detailed report from Bloomberg, Samsung’s Galaxy Note 7 was a major attempt by the company to counter Apple’s newest iPhones. Bloomberg reported that Samsung’s top executives decided to pack the Galaxy Note 7 with a wide range of new features and functions as a way to position Samsung as a leader in the smartphone space, partly based on reports that Apple’s iPhones this year wouldn’t offer many changes from last year’s models. As a result, Samsung engineers struggled to push out the Galaxy Note 7 as soon as possible.
However, Samsung’s efforts didn’t catch problems with the design of the Galaxy Note 7’s battery; Samsung SDI supplies the bulk of the Galaxy Note 7’s batteries, according to Bloomberg, and the gadget’s battery is squeezed into a space that is too small and therefore can result in a short circuit.
As the report notes, Samsung’s troubles were potentially exacerbated by unclear messages about what existing Galaxy Note 7 owners should do with their phones, and when they could expect a replacement.
“Smartphone recalls are rare and we have never seen one in our 15 years of market coverage,” BayStreet wrote in its report. “While we believe potential Note 7 buyers will be mostly channeled into a GS7 or GS7 Edge, the prime beneficiaries outside of Samsung will likely be the iPhone 7 Plus and, to a lesser extent, the LG V20.”
- see this Bloomberg report
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