Can Samsung recover from the Galaxy Note 7 saga?

Can Samsung recover from the Galaxy Note 7 saga?

Unsurprisingly, the vendor reported its worst ever quarter for smartphone sales during Q3 2016.

The controversial Samsung saga, whereby the company was forced to recall more than 50,000 Galaxy Note 7 devices within weeks of launching, has resulted in the tech giant posting its worst performance for smartphone sales on record.

After dozens of devices across the world caught fire due to battery problems, sales in the third quarter of 2016 as a whole declined 14.2 per cent year on year, according to Gartner.

As reported by the research analyst firm, the vendor’s previous worst performance for smartphone sales was a 12.3 per cent drop in the fourth quarter of 2014.

“Samsung had a good start to the quarter, but the battery problem that caused some Galaxy Note 7 smartphones to catch fire led to lower sales of the company's high-end and high-profile line of Note products,” Gartner research director, Anshul Gupta, said.

"The decision to withdraw the Galaxy Note 7 was correct, but the damage to Samsung's brand will make it harder for the company to increase its smartphone sales in the short term.

"For Samsung, it's crucial that the Galaxy S8 launches successfully, so that partners and customers regain trust in its brand."

According to IDC however, not all hope is lost.

Results from a survey undertaken by US consumers after Samsung halted its Note 7 production, revealed that while the company faces some short-term challenges, the controversy will not tarnish the brand in the long-term.

The survey showed that a majority of respondents said it would not impact future decisions to buy other, non-smartphone Samsung products such as televisions and appliances.

Additionally, half of the Note 7 owners polled said they have or will choose an Apple iPhone to replace their recalled phone, while 17 per cent said they would choose another Samsung.

The majority said they will return their phone through a carrier's physical store.

"The Note 7 recall along with all its repercussions, represents a significant event in the world of consumer electronics," IDC research manager mobile phones, Anthony Scarsella, added.

"Although the recall may have an adverse impact on the brand in the short term, the truth is that Samsung remains the clear market leader in the worldwide smartphone market."

"Moving forward, Samsung will need to put the Note 7 to rest as quickly as possible and focus all efforts on producing a stellar Galaxy S8 come next spring. If successful, consumers will quickly forget the Note 7 fiasco if the upcoming S8 can deliver on all fronts."

Smartphone market

According to Gartner, worldwide sales of smartphones to end-users totaled 373 million units in the third quarter of 2016, a 5.4 per cent increase over the third quarter of 2015.

The analyst firm said three Chinese vendors - Huawei, Oppo and BBK Communication Equipment - together accounted for 21 per cent of the smartphones sold to consumers worldwide in the third quarter of 2016.

Apple's iPhone sales continued to fall in the third quarter of 2016, with a 6.6 per cent decline.

The vendor accounted for 11.5 per cent of the global smartphone market - its lowest share since the first quarter of 2009.

Apple sales fell by 8.5 per cent in the US and by 31 per cent in China - two of the vendor’s biggest markets - as the iPhone 7 struggled to stimulate replacement sales.

As a result, Gartner said Huawei continues to close the gap on Apple.

In the third quarter of 2016, there was less than a three percentage point difference in market share between both vendors in the smartphone market.

Gupta said the “highly competitive and feature-packed” Honor devices maintained sales momentum in markets around the world, with expansion into Europe and the US likely to help Huawei record another year of growth.

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Tags GartnersmartphoneIDCsamsungHuaweiOppoGalaxy Note 7BKK Communication Equipment



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