Samsung Electronics Company (KRX:005930) may have halted the production of Galaxy Note 7 to avoid any further humiliation, but the ghost of Note 7 is still haunting the company, apparently. While the Korean electronics giant is leaving no stone unturned in a bid to safeguard its brand reputation and to keep its users glued to devices, the latest report from KGI Security claims that the damages could be severe than expected. According to the report, Samsung could do nothing but seeing 5-7 million of either existing users or potential buyers of Galaxy Note 7 switching to iPhone 7.
Samsung, however, expects that customers will remain loyal, especially when the company has got a deal to offer on world’s most selling smartphone of the first half of 2016, Galaxy S7. Contradicting to Samsung’s belief, KGI Security report claims that users and potential buyers of Galaxy Note 7 waited long enough ignoring Galaxy S7 and S7 Edge; therefore it’s quite unlikely those users would ever settle with almost a year-old smartphone. Instead, just launched iPhone 7 is a better bet than Galaxy S7 for them. In fact, a sizable share of these users may never come back to Samsung, adds the report.
Obviously, this is all expectations and estimations, and no one ones how the dust will settle eventually. The tide has not turned completely to favour Apple Inc. (NASDAQ:AAPL) as reports are claiming many users have even refused to return their Galaxy Note 7.
While everything remains speculated, one thing is sure; the Note 7 debacle is going to cost Samsung a bomb, be it financial or brand reputation. The company has already lost $2.3 billion due to Galaxy Note 7 disaster. The KGI Security report further claims that out of 12 million Note 7 orders, at least 50% would be adding revenue in Apple’s book, while rest being shared amongst other Android manufacturers like Huawei. Also, there is every possibility that some may turn towards Google Pixel phones, albeit it’s out of stock currently.
Apple May See Record Sales of iPhone 7 in Q4 2016
If the estimation of KGI remains correct, Apple could close the first fiscal quarter of 2017 with record iPhone sales. For the last two years, the sales of iPhone in the first fiscal quarter has been clocking over 74 million units. An additional sale of 5 to 7 million units of immensely popular iPhone 7 could make the quarterly sales of iPhone jump up by another 15%, making ongoing quarter the best performing quarter in Apple’s history.
Analysts believe that financial losses may not hurt Samsung as much as brand reputation and shake customers’ confidence. The company, though, may overcome from the disaster in the next 3 to 4 months, and also regain its lost market within the next six months but going further it’s living on the edge for Samsung. One more round of similar fault and the world’s largest smartphone manufacturer will find itself in really hot waters for sure.
The investigation to find the real cause of errors is in full swing, and soon Samsung may learn what went wrong with Galaxy Note 7. Along with that, the management at Samsung who tried to take a shot at iPhone 7, has also learnt a lesson: never try to react out of desperation, especially when you are already ruling the roost and have a competitor like Apple.