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.
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!