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Samsung's Galaxy Note 7 Fiasco Could Be Forgotten In Six Months -- Just In Time For Its Next Flagship Phone


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The fire-prone Galaxy Note 7 was by far the biggest disaster in smartphone history. But industry analysts say the fiasco could be forgotten in six months, and fortunately for Samsung, that’s just in time when the smartphone maker releases its next flagship phone—the Galaxy S8.

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Besides the crisis costing Samsung Electronics more than $5 billion in recall expenses and lost Note 7 sales, the longer term damage is to its brand, which took years to make it one of the most valuable in the world and crucial for consumer products like smartphones.

But Samsung might be able to salvage its reputation and prove once more why it’s the best-selling smartphone maker in the world in the next quarter, when analysts say talk of the debacle would have died down.

“The industry moves pretty fast … there are so many different models that are launched by different vendors every month,” says Xiaohan Tay, a senior analyst at IDC. “I do think that [the Samsung Note 7] news will soon be drowned by other news.”

Ben Stanton, an analyst at Canalys, agrees. “Smartphone launches are so frequent. Samsung, for example, has two major launch events every year,” he says. “This is driven by the fact that, relatively speaking, refresh cycles for smartphones are short compared with other tech categories like tablet and PC.”

Samsung’s new smartphone

The timing is perfect for Samsung. It is expected to unveil its S8 at the Mobile World Congress, which runs from Feb. 27 to Mar. 2 next year in Barcelona. It should then be released in South Korea, Samsung’s home market, in mid-March—about six months after the Note 7 fiasco.

Rumors swirled that Samsung would actually move the release date up in an attempt to salvage the billions lost in profits from discontinuing the Note 7 earlier this month, but they were quickly squashed. “Even before we released Galaxy Note 7, we had a separate plan to announce Galaxy S8,” ETnews reported earlier this week, quoting an unnamed high-ranking official of Samsung Electronics. “Pushing release date forward all of sudden is something that is realistically impossible.”

A critical point

Samsung needs its latest S series device more than ever with its other flagship brand ruined and the company’s reputation tarnished.

The S series is now “extremely important” for the smartphone maker, says IDC’s Tay. “It’s Samsung’s highest priced key flagship after the Note. It needs to go all out to win consumers over. All out be it from the technology, innovation and marketing standpoint.”

Recent reports point to Samsung doing just that. On Thursday, the Wall Street Journal wrote that the latest S series smartphone “would feature slick design and an improved camera, as well as an enhanced artificial-intelligence service,” quoting Lee Kyeong-tae, Samsung’s vice president for mobile communications.

And earlier this month, Samsung acquired Viv Labs, an AI assistant startup founded by the creators of Apple’s Siri. It is speculated that Samsung will include Viv’s technology in the S8 to try and match Apple and Google’s own voice assistants, though Lee declined to comment on the matter to the Journal.

Looking ahead

There’s also a bottom line to think about. Canalys’ Stanton says Samsung’s flagship products carry the brand of the company, as well as a large chunk of the margin, which it needs to recover quickly, especially after the figures in its recent financial report.

Samsung on Thursday reported a 96% year-to-year plunge in quarterly operating profit in its mobile division. “We are expecting some difficulties until the first quarter of 2017,” Samsung’s Lee Kyeong-tae said in a conference call with analysts, “but we will achieve a business turnaround with the release of our new flagship smartphone.”

“Samsung also needs to get its messaging right to rebuild brand confidence,” Stanton says. “It needs to tangibly demonstrate that it has learned a lesson from the Note 7 saga. It will be interesting to see if Samsung directly addresses this in its launch keynote.”


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