Tuesday, October 11, 2016

The Galaxy Note 7 goes up in smoke, Samsung enjoyed – Release

The curtain has fallen on the Galaxy Note 7. After searching for several weeks to contain the crisis, Samsung, its Korean manufacturer and the world leader in smartphones, announced Tuesday that he gave up definitively to the production and marketing of its mobile device the most sophisticated to date. A first in the annals of high-tech, sanctioned by a descent of the title of 8% in the Stock market. the “By making consumer safety our number one concern, we have come to the final decision to stop the production of the Galaxy Note 7″, has been explained by the giant south Korean, stating that it was abandoned, “final”. This decision as painful as humiliating to the conglomerate Korean puts an end to more than a month of breakup : this phablet – a term that refers to a sort of intermediary between the smartphone and the tablet – was launched early in August in order to outflank the great rival Apple and its new iPhone 7, in the high-end segment. It is a failure of monumental, because while the Galaxy Note 7 will disappear, the iPhone 7 is out of stock since a few days, and has now before him a boulevard before that Samsung may not return to the charge with a new product.

A fiasco to “$ 10 billion”

The Korean manufacturer had first been forced on September 2, to order the recall worldwide of 2.5 million copies of the Note 7, after that some specimens had caught fire because of the explosion of their rechargeable lithium-ion battery during charging. The images of phones charred that have flooded social networks and ads in the planes of the prohibition of lighting on board a “Note 7″ have contributed in a few weeks to ruin the image of Samsung for millions of consumers around the world. The image of the group has taken an additional hit when he implicitly acknowledged for the first time on Tuesday that the devices are distributed in replacement of the first million Note 7 posed also a problem. the “The first time, this can be interpreted as an error. But the same thing happened twice on the same model, and it will generate a considerable loss of consumer confidence”, observes an analyst of the mobile market, according to which “Samsung will have a hard time to reverse the trend.” It encrypts this fiasco to “ $ 10 billion or more,” for the Korean giant, which will now have to fight hard to avoid that public disaffection may spread to the entire Galaxy.

The giant south-Korean more diversified than before

Crucial for Samsung at a time when the global market of smartphone has seen its growth severely slow down with a relentless rise in power of the chinese competitors, this “phablet” cursed is she going to all rush on to hell the world number one in the sector ? If this withdrawal is dramatic for the image of Samsung, the giant south Korean company is now more diversified than it was a few years ago. During the last quarter, the weight of smartphones in revenue from Samsung represented a less than 50% against 60% three years ago, compared to 22.5% for consumer electronics (televisions, air conditioners, etc) and 27.5% for the supply of components (semi-conductors, screens of smartphones, slabs of tvs, including Apple. In addition, Samsung has its place of number one in the world of telephony that it has raflée there are already several years with Nokia, the fact that he is very present on the models mid-range. Unlike Apple, it is not only specialized in models more expensive, as was the Galaxy Note 7. In 2014, it offered no less than 56 different models and even if Samsung has gradually reduced its range, the models premium account for only a small share of sales, as evidenced by an a average selling price which was $ 272 dollars in the second quarter. What made her allow, at least in the next few months, and remain the world number one in the sector.

A hard blow to the mobile business

It is, however, otherwise profitability is much higher on the high-end models and 13 million of Galaxy Note 7, Samsung could be expected to sell up to the end of 2016. According to Mark Newman, an analyst firm Bernstein Research cited by Les Echos, the Note 7 would have been able to generate alone 20% of the net profit of the mobile branch of Samsung by the end of the year, and 8.5% for the whole of 2017. It remains that if this fiasco is a big blow to the mobile business and could accelerate the inexorable rise in power of china, Samsung appears untouchable on its other two strongholds that are the production of semi-conductors and Oled screens, which will gradually take the place of LCD technology. Areas requiring tens of billions of investment in research and development and in infrastructure, and on which the Chinese will put a lot of time to come to compete with Samsung.

Finally, although Samsung has sold about 70 million smartphones in the second quarter, against 40 million for Apple, it is the latter which is still far and away the most profitable on this market segment. From this point of view, the profitability gap between the two competitors, in addition to the taken in us courts, because of intellectual property, is likely to increase.

Christophe Alix

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