Samsung Note 7 stumble opens opportunity for Apple, Huawei

Erwan Lucas and Roland Jackson, Agence France-Presse

Posted at Oct 12 2016 09:28 AM

Samsung Note 7 stumble opens opportunity for Apple, Huawei 1
Sales promotion staff stand in front of a Galaxy Note 7 advertisement at a Samsung store in Jakarta, Indonesia, October 11, 2016. Beawiharta, Reuters

PARIS - Smartphone customers losing faith in Samsung have plenty of choice at a time when Apple, Google and China's Huawei are each pushing new models that up the features ante and do not self-combust.

"All of Samsung's competitors are rubbing their hands in glee," said Thomas Husson, an analyst with the Forrester technology research and consultancy firm.

"It's basically a good product, released at the right time, but a slip-up, and we've seen in the past with Nokia or Blackberry that these can have disastrous effects," he added.

While it is too early to predict a similar disappearance from the phone market of the South Korean company, rivals are nipping at the heels of the market leader.

These include not only Apple and Chinese companies like Huawei, but also internet titan Google, which entered the smartphone market last week with its own device -- the Pixel.

"There will inevitably be some moderate-to-marginal benefit for Samsung’s handset rivals, more particularly Apple, perhaps faster-growing Huawei can benefit more from Samsung’s Note 7 travails," said analyst Ken Odeluga at the online trading firm City Index.


However Ian Fogg, senior director and head of the mobile and telecoms team at the IHS technology consultancy, said that "Huawei will be the biggest beneficiary from brand damage to Samsung."

One of the largest providers of network infrastructure globally, Huawei has been pushing into the smartphone market, including the top-end segment with its P9 model that features a camera with two Leica lenses.

"Huawei will look to pick up sales right across its portfolio," said Fogg, noting that Huawei was already the third-largest smartphone maker.

"Like Samsung, it uses Android and offers smartphones at a wide range of prices."

The blow to Samsung is unlikely to be fatal, however.

"Competitors might enjoy a short-term boost to sales as a result of a major player having to withdraw its new model, though overall it is likely to remain a competitive market," said Laith Khalaf, an analyst at Hargreaves Lansdown brokerage.

Part of the reason is that its competitors have their own challenges to surmount.

Huawei, for instance, still needs to build its brand in Europe and North America.

Meanwhile Apple needs to recapture the excitement around its products that has disappeared in recent years.


Thomas Husson at Forrester believes "it is too early to say what the long-term impact will be" from this incident, although the recall is likely to set it back a considerable amount.

Linda Sui, wireless smartphone strategies director at Strategy Analytics, estimated that Samsung could lose "$10 billion or more" over the recall.

"The loss of sales from the Galaxy Note is only the tip of the iceberg," warned CMCMarkets analyst Jasper Lawler.

"Demand for the flagship Galaxy S8, scheduled for release early next year, could be severely impeded by the loss of consumer confidence in the Samsung brand."

But City Index's Ken Odeluga said that "nobody wants to believe Samsung has ‘lost its touch’ at producing beautiful and advanced consumer technology."

"So there is some underlying sentiment that views its problems as the kind of bad luck which could afflict almost any smartphone maker that is pushing boundaries."

But ManMohan Sodhi, a professor of operations and supply chain management at Cass Business School in London believes that it wasn't bad luck as much as bad judgement.

"They should have figured out the product but with Google coming out with the Pixel, they did not give it enough time," said Sodhi.

While Google has developed the Android operating system that powers the smartphones made by Samsung and other manufacturers, except for Apple, it has generally stayed on the sidelines when it comes to handsets.

The release of the Pixel, along with its Google Home virtual assistant, indicates that Google aims to get its artificial intelligence technology into the hands and homes of consumers.