Apple and Huawei Will Benefit Most From Note 7's Failure, but Profit May Have Already 'Peaked Out'

Discussion in ' News Discussion' started by MacRumors, Oct 17, 2016.

  1. MacRumors macrumors bot


    Apr 12, 2001

    Apple and Huawei will be the biggest beneficiaries following the discontinuation of Samsung's Galaxy Note 7 line, according to research conducted by KGI Securities analyst Ming-Chi Kuo. The two companies will mainly see orders increased by users looking for a smartphone with dual camera support, including Apple's iPhone 7 Plus and Huawei's upcoming Mate 9.

    While Kuo believes Apple will benefit majorly following Samsung's troubled Note 7, the analyst also says that those benefits are "largely reflected in raised forecasts," and not as much in actual iPhone shipping numbers. Of the original 12-14 million Note 7 units expected to ship in 2016 before the exploding battery drama, Kuo estimates 5-7 million Note 7 users may switch to iPhone, mainly expected to be the iPhone 7 Plus.

    Because of this, the analyst believes Apple's biggest benefits of the Note 7 discontinuation have already "peaked out." It's estimated that it will take Apple between 3 and 5 weeks to accommodate additional orders of the iPhone 7, especially "if the company does not expand the current production capacity of the iPhone 7 Plus."

    Right behind Apple, Kuo believes that Huawei will gain the second biggest benefit of the Note 7's failure, particularly due to its foothold in China and Europe. With the impending launch of the Mate 9 in the fall, the analyst looks at Huawei as the best alternative for Note 7 users who are leaving Samsung's smartphone lineup but seeking to remain in the Android family.

    Ultimately, Kuo notes that while the impact of the discontinuation of the Note 7 will likely not last very long, if Samsung makes the same mistakes on the Galaxy S8 -- expected to enter mass production in Q1 2017 -- the analyst believes its brand "will be hurt immensely." It's expected Samsung will be more patient with the S8, however, since the smartphone's 10 nanometer production process is facing yield issues and as a whole the company will "make greater efforts with quality control" after rushing to production with the Note 7.

    The Note 7's discontinuation began with a recall of the devices in early September following a few user reports of exploding batteries in the smartphone. After the recall, Samsung faced a series of unfortunate events as its shares plummeted, supposedly safe replacement phones began exploding, and a Bloomberg report painted it in an unfavorable light, indicating that the company rushed the Note 7 into production to do battle with Apple's iPhone 7.

    Prior to launch, rumors that eventually became true were suggesting that the iPhone 7 would not receive a major design change, so Samsung could therefore benefit from being an enticing alternative to users on the fence. The Note 7 is now officially discontinued, banned from all United States passenger flights, and expected to cost Samsung around $2.3 billion, essentially erasing "all the mobile business profit" from the company's revenue for the quarter.

    Article Link: Apple and Huawei Will Benefit Most From Note 7's Failure, but Profit May Have Already 'Peaked Out'
  2. GrumpyMom macrumors 604


    Sep 11, 2014
    If they are more careful I'm looking forward to at least considering the S8. I certainly can't complain that we were treated badly in all of this but that's a huge credit to the carriers for throwing their weight around a bit.
  3. gim macrumors 6502


    Jul 27, 2014
    "the impact of the discontinuation will likely not last very long"

    Strongly disagree with that. The damage that has been done to the brand Samsung is permanent.
  4. Derekuda macrumors 6502


    Oct 2, 2004
    As the IT person for my company, I order all of our cell phones and upgrades. Most of our people have opted away from the iPhone now that they no longer have headphone jacks. It really seems to have struck a nerve with people. Personally, I feel the same way and can't blame them.
  5. singhjeet29 macrumors regular

    Oct 9, 2008
    "Of the original 12-14 million Note 7 units expected to ship in 2016 before the exploding battery drama, Kuo estimates 5-7 million Note 7 users may switch to iPhone, mainly expected to be the iPhone 7 Plus."

    40-50% seems like an extremely high rate of people switching from a Note to an iPhone. I think it would be a lot lower. There are a lot of other great Android options as well these days, so a prospective Note buyer wouldn't have to necessary switch OS's. I do think Apple, Huawei and Google (with the Pixel) stand to gain the most though.
  6. Derekuda macrumors 6502


    Oct 2, 2004
    LOL! You're joking right!? I know people who are already itching for the galaxy s8 and Note 8 or whatever it will be called. This is literally a blip on people radars.
  7. Stiss macrumors 6502a

    Apr 18, 2009
    Just another day here at
  8. chr1s60 macrumors 68000


    Jul 24, 2007
    The only Note 7 users that I see switching are anyone who no longer values the brand after all the issues or someone that was relatively new to Android to begin with. Users within the higher end Samsung phones, from my experience, tend to be pretty loyal to Android and would likely just swap to another Android phone instead of the iPhone.
  9. NexusUser macrumors member


    Aug 24, 2016
    I'm a little surprised that the Pixel phone wasn't mentioned as benefiting from the Note 7 fiasco. I know a couple of people with the Note 3 and 4 who are considering a Pixel XL now that the 7 is finished.
  10. chr1s60 macrumors 68000


    Jul 24, 2007
    I agree that it will likely be much lower. I can see them saying maybe 40% as an absolute best case scenario. I wouldn't be surprised if that number was likely closer to 10%.
  11. keysofanxiety macrumors G3


    Nov 23, 2011
    10nm? Hmm. I'm pretty interested to see how the performance of the S8 chips would compare to the iPhone 7.
  12. iapplelove macrumors 601


    Nov 22, 2011
    East Coast USA
    Human beings in general are forgetful creatures with extremely short attention spans.

    Samsungs phone division will hurt for a while, but not permanent. Just my opinion.

    Really? I didn't think it was that huge of a deal, in fact I know plenty of IT people who have not even considered switching over a headphone jack.
  13. lowendlinux Contributor


    Sep 24, 2014
    North Country (way upstate NY)
    I think its a different customer base.
  14. TroyBoy30 macrumors 68020


    Jun 9, 2009
    Atlanta GA
    I would think more would move to the upcoming LG V20 than the iphone

    as an IT person for a company, you tell them what phone to get, not the other way around. Out of 1500 employees who upgraded to the 7, I've had zero even mention the headphone jack.
  15. Quu macrumors 68030


    Apr 2, 2007
    Is Kuo unaware that Samsung is giving Note 7 owners $100 to pickup another Samsung phone? - I think that will sway quite a few people to buying the Galaxy S7 Edge, it is after-all a very good flagship phone with most of the features that the Note had (apart from the Pen and some other smaller bits).
  16. Goatllama macrumors 6502a


    Jun 24, 2015
    Mountaintop Lair
    It really didn't take much paint, did it? Wish the same could be said for art, would save a ton of money.
    Ouch. :eek:
  17. Abazigal macrumors G4


    Jul 18, 2011
    More important question - will there ever be a quarter where Apple can vacuum up 100% of the mobile profits?

    This is probably the closest Apple will ever get to that achievement.
  18. coolfactor macrumors 601

    Jul 29, 2002
    Vancouver, BC CANADA
    I recently upgraded from an aging iPhone 4, running iOS 7.1.2, to an iPhone SE running the latest and greatest iOS 10, and all I can say is — wow! I follow iOS development pretty carefully, and have used iOS 9 on an iPad, but my SE feels like a significantly revamped experience. Everything is so smooth and slick. It feels very sophisticated. Meanwhile, using Android on my girlfriend's Samsung still feels clunky and awkward.

    Anyone switching to iPhone from the failed Samsung Galaxy Note7 debacle should be very happy with the experience, I think.
  19. 62tele macrumors 6502a

    Apr 11, 2010
    You couldn't possibly be biased towards Samsung products could you?

    That's fine. We all have our preferences. Let's see: no headphone jack vs an exploding phone.

    BTW, how long do you think Samsung sticks with the headphone jack?
  20. gim macrumors 6502


    Jul 27, 2014
    Like that is proving anything.
    There are more than enough people with a good memory out there, and those people will likely think twice before buying Samsung again. So the damage to the brand is permanent, at least to some extent.
  21. BeamWalker macrumors 6502a


    Dec 18, 2009
    Only in a couple of markets. In Germany for example Customers can get either their money back or switch to an S7 Edge - that's it.

    I agree with most of you here though, 5-7 million people switching not only hardware but software seems highly exaggerated.
  22. chr1s60 macrumors 68000


    Jul 24, 2007
    I can't wait til this happens, which it will, but Samsung won't make a move until at least 2018 is my guess. They will let Apple take the hit from the initial uproar it caused and see if they actually stick with it. Technology is a copy cat industry and once Samsung finds a reason to ditch it to make room for more battery or whatever feature, they will.
  23. zombierunner macrumors 65816


    Jan 18, 2011
    Samsung should launch Note 6 next year :D
  24. slimothy Suspended


    May 31, 2011
    I think this will definitely hurt Samsung's credibility, but they have so many other diverse products, they won't be going away anytime soon.
  25. pika2000 macrumors 603

    Jun 22, 2007
    Samsung has established its brand. It takes more than this Note 7 debacle to push the brand down. On the other hand, if Samsung made another mistake, especially with the primary S lineup, it would hurt more.

    Most Note 7 users will simply opt for the S7 edge or iPhone 7 plus. Contrary to the opinion of the geeks, the Note 7 is a status symbol. It is the most expensive Samsung phone, and people buy it to show their friends they can. Most of Note 7 users don't even know all the features nor use the S-pen. With the Note 7 gone, the obvious choice is the next most expensive phone, the S7 Edge. Either that, or they go for the next status symbol, the iPhone 7 Plus.

    Huawei and the likes won't really benefit much since their brands are not up there yet. I mean seriously, if you have the money to buy a Note 7, why would you stoop low to get a Huawei? You'll be looking for another Samsung flagship or an iPhone.

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