Here’s Who Is Benefiting From Samsung Galaxy Note 7 Woes
Analysts are slashing their projections for sales of Samsung’s troubled Galaxy Note 7, but the problems may provide an opportunity for other phone makers.
Samsung was forced to recall the 5.7-inch smartphone last month after dozens of devices overheated and even caught fire. Now, the same problem is cropping up in replacement Note 7 models that were supposed to have corrected the faulty battery danger. Amid reports that Samsung had halted production of new Note 7 phones, the company said on Monday that it was “temporarily adjusting” its production schedule “in order to take further steps to ensure quality and safety matters.”
That leaves millions of customers who bought Note 7 smartphones with few options. They can get refunds or exchange devices from wherever they originally made these purchases. But most carriers have stopped offering replacement Note 7 devices, so customers will likely have to pick different phones.
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“These phones should have sold well over ten million units, but instead Samsung may well end up selling very few and destroying much of the inventory, while buyers replace Note7 devices with iPhones and other competing devices,” says Jan Dawson, chief analyst at Jackdaw Research.
Apple (AAPL) won’t be the only beneficiary—particularly as Note 7 owners may be looking for a replacement that also runs Google’s Android operating system. Among the most recently released Android phones are the Moto Z (made by Lenovo’s Motorola unit), LG’s V20, and Google’s (GOOGL) two new in-house Pixel models.
Outside of the U.S., Chinese brands Huawei and Oppo, which both make larger-screen phablets resembling the Note 7, should see sales increase, says Neil Shah, research director at Counterpoint Technology. He slashed his 2016 forecast of Note 7 sales from 11 million units to five million.
The multiple rounds of problems have caused “huge damage to the brand” and about $4 billion in lost sales, he says.
The key attraction of the Note 7 for many buyers was the included stylus and few other models have a stylus.
“Historically, the Note as a product was for users who really loved the pen input, and in that camp, you really do not have many competitors,” says Carolina Milanesi, an analyst at Creative Strategies. Still, she suggests the LG V20 and Google Pixel could benefit from Samsung’s woes.