Samsung may have acknowledged that its disastrous Galaxy Note 7 debacle is likely to cost it $5.3 billion, but the real cost — the negative impact on customer loyalty — may turn out to be the real killer.
That’s according to KGI analyst Ming-Chi Kuo, who suggests that around 5-7 million ex-Note 7 customers will become new iPhone 7 customers as a result of losing faith with the Samsung brand.
The 5-7 million units figure is calculated by looking at the total 12 million Note 7 orders, of which Kuo thinks Apple will get around half, while the rest will be split up among Android manufacturers, such as Huawei.
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Samsung had one of the most disastrous smartphone launches in history with its Galaxy Note 7, which boasted the added (unwanted) feature of bursting into flames. It underwent one costly recall, only to find that many of the replacement units also blew up on planes and elsewhere.
“Moving forward, Samsung Electronics plans to normalize its mobile business by expanding sales of flagship models such as the Galaxy S7 and Galaxy S7 edge,” Samsung has said in a statement. “Additionally, the company will focus on enhancing product safety for consumers by making significant changes in its quality assurance processes.”
The greatest irony in all of this is that Samsung apparently rushed the Note 7 to market because it thought it could capitalize on a weaker-than-usual iPhone refresh from Apple.
Not only did the iPhone 7 turn out to be more interesting than Samsung expected, but — if it truly was a less desirable smartphone than usual — Samsung has helped it out enormously by throwing customers in Apple’s direction.
Better luck next time, Samsung!
Via: 9to5Mac
Luke Dormehl is a U.K.-based journalist and author, with a background working in documentary film for Channel 4 and the BBC. He is the author of The Apple Revolution and The Formula: How Algorithms Solve All Our Problems … and Create More, both published by Penguin/Random House. His tech writing has also appeared in Wired, Fast Company, Techmeme and other publications.
28 responses to “Note 7 flameout means millions of new iPhone owners”
lol! No it doesn’t, it means more s7 Edge and other Android users. As much as Apple people fantasize about the idea of Samsung users bailing on Samsung and going to Apple, its not happening, maybe a small percentage will, Ive read a few people say they are, but that can be chocked up as people trying to take a dig. But also account for the 80% + non-return rate of the Note 7, not only are they not going to Apple, they’re not returning their Note 7 even with a recall. And any brand/OS loyal user isnt jumping to Apple, they’re going to the S7 or another Android device.
Stop assuming nonsense.
All these years I’ve been led to believe that only Apple had fanboys. Not sure where you’re getting your data from, but I would suspect there is a much higher rate of defection than your estimate.
I own all Apple stuff, iPhone, iPads, Macbook Pros, Apple TV, etc. and I agree with him, some will switch, but many will simply go to another Android phone, like that new Pixel.
Probably not that many defections, base on ecosystem buy-in. Why would somebody suddenly switch and re-purchase all of their other apps, when there are plenty of perfectly good Android devices out there after the Note 7?
Give me a list of reasons why an iPhone user wont switch to Android, and I’ll copy and paste them in my comment back as to why an Android user won’t switch to Apple.
iPhone isn’t some holy grail phone Android users haven’t been able to get their paws on, they’re everywhere and way more pushed and accessible than any other brand of phone, if they wanted them, they’d have them.
The Note 7 crashing down isn’t making people yearn for an iPhone all of a sudden, They’d switch brands and only lose things like Samsung Pay and Fast Charge or even stay with Samsung and grab a S7 Edge and lose nothing but the S-Pen. It’s logic, doesn’t Apple have an app for that? lol.
Reason 1: Users don’t want their phones to explode.
1. Phones aren’t exploding. The battery cells are rupturing causing it to burn up.
2. Apple iPhones have also had this occur, so welcome to not being perfect.
3. Pot, Kettle.
4. Clickbait.
5. More than one line is required to make a list.
6. I’m all about long sullen silences, followed by mean comments, followed by more silence! So what’s it gonna be: long sullen silence or mean comment?
7. Start retort now.
I missed the part where the FAA banned iPhones from all domestic flights.
You know, it is important to live in reality. I don’t think anyone in his rightful mind would wish to have a self combusting phone in their house. I wouldn’t have my child anywhere near a device that is known to be a fire hazard. Just as much as I wouldn’t drive a car that has been recalled for brake problems, its like you are asking for trouble for no reason.
Its all good to fantasize that people would stay with Samsung, but the fact of the matter is the brand has serious issues that need years to recover customer trust. The idea that Galaxy Note 7 users would migrate to iPhone 7 is actually logical, primary because these are the two products that dominated the market for years and have carved a category with their flag ship devices that no other company completes in both in price and specs.
if this was a lower device then yes, customers might upgrade to a better device or move to Sony or Blackberry or others, but this is the elite of the elite series, there is nothing in the market that has an established record of the same high entry price range other then the iPhone.
We obviously read 2 different articles … the title says “Note 7 flameout means millions of new iPhone owners” not “Note 7 flameout COULD mean millions of new iPhone owners”
Samsung users absolutely could, in fact, go to iPhones it’s called free will, will it happe by the millions? No. Does this use author use clickbait and bullshit to show his “fanboy” yes. No data to support his claim or the title, This article is the only “flameout” i’ve seen today.
Not really, I am a CTO and am all about performance and functionality. For example I upgraded recently to iPhone 6, the bend gate one. Why because it is a free upgrade, gets the job done, and has all the functionalities I need without fancy options like 3D touch or additional screen space, but most importantly its stable and my application which are remote operate do not need advanced processing power to be on device.
Now, clearly people in the market place do not follow this rule, otherwise we wouldn’t have progress. They have the tendency to buy the latest and greatest, to get access to features that they do not need or would never use. But that is exactly the point I am making, people that went with Galaxy Note 7 aren’t choosing the device because they are tech savvy, its the prestige they are after of owning the best device, those people wouldn’t want to be the joke bud at a party, they will do the switch. This is market economics 101, understanding the mind set of your customer base, loyalty is secondary to trend, this is why Blackberry population disappeared when the app market picked up. BB didn’t provide the same volume or quality of applications, and even though BB fanboys were committed they had to move on because of trend.
Right now Samsung has a bigger problem then that faced with BB, Samsung management knows it and they made the impact clear to the share holders. This is a company it doesn’t operate based on emotions there is market index indicators that are LAW. They expect a major contraction in there mobile market, the better question from a production point of view is, does it make sense to continue in the market and what is the amount of money this department might lose before becoming profitable again.
That is the same question Microsoft posted before pulling the plug on its mobile device, BB might have caught up a bit too late with the DTEX phone set, and Sony just keeps on printing more phones a philosophy that only the late ericson had its results are yet to be seen.
Bottom line is even if you don’t agree with the reasoning behind why people will inevitably switch, if I wanted to buy stocks given the current market events I would bank of Apple stocks to go higher, expecting a higher then usual sales quarter. People are People, Fanboys are people that like there toys, and are in love with them, if you are given a better toy from a different manufacturer you would love it even more.
Eventually the phone market will go to a low turn frequency as there is nothing more a phone can do, and the focus will become on cloud services in the app form, the question then is what echo system is easiest to develop on with the highest paid customer base for developers.
The fxck are you on about? …
This is why Apple users look dumb in a debate, the debate cant be won with specs or facts, so we start talking stocks, economics, opinions and preference …
Ok so you don’t upgrade because you’re “savvy” congrats, people upgrade for a lot of reason, just because you don’t, doesn’t mean they’re wrong. What an idiotic response.
Poor thing. I can see logic and reason is wasted with the witless. You know what.. What do i care, go hug fxck your Samsung Galaxy Note 7 and get 3rd degree burns… lol…
I dont need your pity CTO, but in a futile attempt to distract from the point I made you went the ol’ “I wont waste my time replying anymore” as do most Apple lovers do when pressed to talk facts, even though you were all about inserting that you are in fact a “CTO” and then typed a 3 page essay as to why you think thats relevant to this conversation.
And what logic or reasoning was used? All i saw was you using any excuse to say “I’m a CTO” lol I bet if we trolled every comment or post you’ve made on any forum about anything it starts with something like:
“Bro, lemme answer your question, I’m a CTO …”
“Bro, trust me, I’m a CTO …”
With comments like your last one, I bet you’re the CTO to a real classy company.
He just wanted you to know that he is a CTO. He thinks that makes him seem like he is important.
Good thing there was a CTO on these forums, how would anyone get any solid information on anything?
LOOOOL… I understand now why SAMSUNG is trying to get rid of people like you as clients… Who can blame them. Well done SAMSUNG keep up the good work.
lol!
… oops i mean “ouch” … you’re really going for the throat man. Tossing around them hard-hitters. lol you’re trying so hard to hurt my feelings. Just sooooo mad and insecure it’s sad.
lol But ou say shit like “go hug-fxck a cellphone” and yet its “people like me” who companies don’t want to be seen with their brand … lol gotcha.
Again, I bet the company you’re “CTO” for is classy or – in my best guess, just flat-out non-existent. I bet Samsung wants people like me gone, you know those “idiots” who spend $1,000s of dollars on products and upgrades a year, vs. you who doesn’t, yeah you definitely are the target market every big company is eye-balling.
lol goon.
Did you hear of SAMSUNG upcoming phone SAMSUNG C4 … be a good boy and go buy it :P
Harf, Harf, Harf.
Man … YOU ARE HILARIOUS! Whew! CTO? You sure you’re not a comedian? If not you missed your calling!
Lol frigging cringe-worthy responses from this goober. You ARE that Apple user poster child.
And naturally the SAMSUNG C4 PLUS for special customers with special needs :P
Lol! What?! What does that even mean? Are you drunk?
Just stop man, I seriously feel embarrassed for you. Lol just step away from your keyboard before you attempt anymore “jokes” I’m being real with you, you’re embarrassing yourself.
I think you need to hear Johnny cash – Hurt, I think that summarizes how you feel towards your dear late SAMSUNG. RIP SAMSUNG RIP NOTE 7
Yup, I switched over to an Iphone 7 from a Note 7. Too bad about the Note had issues as it was a very good phone. But the Iphone 7 is way faster than my Note 7 was, the apps on IOS is superior to android, and I’m liking the size of this Iphone 7 since Iv’e been totting around different phablets for years. I own an Ipad anyways.
I can respect that! Enjoy your new toy!
I have many apple products and prefer the apple ecosystem. However this author is so childish in his writings. He dosnt even try to hide his childish rants. Seriously, nothing but nonsense.
+1
I didn’t realize the Note 7 was the only Android phone…*rolls eyes*