We are in the midst of another revolution in the smartphone industry. Surely, 2017 is going to be a seminal year for some of the biggest smartphone manufacturers in the world. We are expecting revolutionary new products from industry behemoths like Apple Inc. (NASDAQ:AAPL) and Samsung Electronics Co. Ltd (KRX:005390). This year, they also stand to face stiff competition from other upcoming stars – LG’s G6, Google Pixel 2, Oneplus 4 and even Nokia’s new flagship Android smartphones. Samsung, who has achieved unparalleled success in the previous years, is the current leading Android smartphone manufacturer in the world. In 2016, Samsung once again topped the list of smartphone shipment market with 21.4% share. However, the once invincible Samsung is surprisingly vulnerable this year.
However, the once invincible Samsung is surprisingly vulnerable this year.
Let’s have a look at the factors that will likely determine the success of Galaxy S8, and why Samsung is facing a challenge unlike any other it has faced throughout its illustrious history.
The Samsung Note 7 Debacle And Setback
Samsung launched its flagship Galaxy Note 7 device in August 2016. The device was hotly anticipated, with a variety of innovative new features such as an iris scanner. However, the Note 7 turned out to be a complete and utter failure. It suffered from catastrophic battery and safety issues and ultimately had to be recalled. This fiasco has seriously damaged Samsung, both monetarily and in public perception. As we reported earlier, Samsung lost nearly $2.3 billion within two months due to this disaster. This also allowed Apple to overtake Samsung in smartphone shipments in Q4 2016 for the first time in 5 years. As a result of all this, Samsung is now under immense pressure to deliver. With the sharks circling, Samsung can not afford to make any other mistake with the launch of the Galaxy S8.
The Dark Horse: LG G6
This year we also have an unexpected challenger in the smartphone market – the LG G6. LG has managed to create an innovative, powerful and very premium smartphone. Coupled with the nearly $400 worth of pre-order bonuses the company has promised, the device has led to record-breaking sales figures in South Korea. KB Securities report first day sales of 20,000 units, which is nearly double the first day sales for the Galaxy S7 Edge. Pre-order figures are also impressive, with upwards of 82,000 pre-orders since March 2.
The impressive sales of the LG G6 have forced Samsung pump in advertiser dollars into TV ad for the Galaxy S8 – much earlier than expected. This is a very unusual move from Samsung, who have typically maintained dominance in the Android Korean market. According to a report by Strategy Analytics, Galaxy S7, the Galaxy S7 Edge and the LG G5 were the top 3 most popular smartphones in South Korea in Q2 2016. Despite recent setbacks, Samsung remains the biggest player in the Korean market. LG is second with 19% of the market share, followed closely by Apple at 17%. However, early sales figures for the G6 indicate that LG is eating into Samsung’s share of the premium smartphone market in South Korea.
As LG G6 is scheduled for global launch in April, Samsung doesn’t want to leave any stone unturned to avoid the warmth from its homegrown rival. LG, which is also struggling in the smartphone business, will make every possible move to replicate the success of LG G6 in the US and other countries. Analysts believe it’s high time for LG to make a strong come back before it’s too late for the company which used to be ranked among the Top 5 smartphone vendors globally.
The Titan: iPhone 8
Without a doubt, the biggest challenger to the Galaxy S8 this year will be Apple’s iPhone 8. With 2017 marking the 10 year anniversary of the iPhone, Apple is pulling out all the stops. The iPhone 8 looks set to be the fresh and innovative iPhone ever. The extensive list of rumoured new features and design changes are all but certain to make the iPhone 8 a resounding success. And, if that doesn’t impress, rumours are also making rounds that Apple is working on an ultra-premium iPhone Edition.
Apple also has momentum on their side, after shipping 78.3 million units in Q4 2016 compared to Samsung’s 77.5 million. This marks the first time in 5 years that Apple beat Samsung in the number of smartphone shipments.
Analyst Ming-Chi Kuo believes this trend is likely to continue. According to Kuo, the Galaxy S8 “lacks sufficiently attractive selling points” which is why consumers will gravitate more towards the iPhone 8.
What Does The Future of Galaxy S8 Hold For Samsung
Samsung’s smartphone division has seen a meteoric rise over the past decade. They have based their success on iterative evolution and fine-tuning their existing formula. However, because of the Note 7 debacle, the Galaxy S8 has become the foundation of the relaunch of Samsung’s smartphone division. It is now being viewed as the rebirth of Samsung in many ways. Apparently, this is Samsung’s only chance to repair its damaged brand image and return to the top. To do so, Samsung is taking quite a few risks with its new flagship and faces many hurdles to success. Besides certain design changes and the addition of an iris scanner, they have made the decision to completely abandon the flat screen version of the S8 in favour of two models with a 5.8 and 6.2-inch displays respectively, similar to what Apple does. Samsung will also go with a single lens camera setup, unlike the dual lens found on the iPhone. We will have to wait and see how well these changes are received by customers.
But it’s not the competition from other rivals that are putting Samsung in a fix; the views and takes of industry pundits, who see not-so-encouraging response to Samsung Galaxy S8, are also a point of concern for top leadership in Samsung. Analysts at KGI do not have a very positive outlook on the future for Samsung. Ming-Chi Kuo predicts lukewarm sales for the Galaxy S8 at 40-45 million shipments in 2017. This is even lower than the 52 million Galaxy S7 units shipped in 2016.
With new competitors like the LG G6 and the demand for the iPhone 8 expected to be record-breaking, the pressure is on Samsung. The market expectations from Samsung are extremely high, and it remains to be seen whether the market leader can beat or meet or fails despite having decades of experience in the smartphone industry. Whatever be the case, one thing is certain; Samsung will have to work its fingers to the bones in 2017.
