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A Tale Of Two Sevens: Samsung Galaxy Note7 And Apple iPhone 7

The newest iPhones hit stores today, as Samsung formalized its recall 9/16/2016 01:15:00 PM Eastern
Take Away

Samsung's conduct during the recall will be critical in curbing any longer-term damage to its reputation, said Gap Intelligence analyst Scott Peterson.

Updated! It’s been the best and worst of times for two of this season’s most anticipated and, for different reasons, hottest mobile phones.

Apple’s latest iPhone iterations finally went on sale today, but shoppers who failed to place advance orders may be disappointed: The company said initial quantities of iPhone 7 in jet black, and all finishes of the iPhone 7 Plus, sold out during the online pre-order period and won’t be available to walk-in customers.

Demand may have been goosed by generous carrier promotions, like T-Mobile’s offer of a free 32GB iPhone 7 with the trade-in of an iPhone 6 or 6s. The result, reported president/CEO John Legere, was “the biggest pre-order in T-Mobile’s history.”

See: By Dropping The Headphones Port, Apple Ups The Ante

The news was more somber at Samsung, which after several false starts announced a formal, U.S. Consumer Product Safety Commission (CPSC)-sanctioned recall of its ill-fated Galaxy Note7 yesterday.

Samsung said it will either exchange phones or refund customers whose phablets have potentially flammable batteries, and will throw in a $25 gift card or credit to boot.

According to the CPSC, Samsung has received 92 reports of the batteries overheating in the U.S., including 26 reports of burns and 55 reports of property damage, including fires in cars and a garage.

Samsung is expected to take about a $1 billion hit from the worldwide, 2.5 million-unit recall, which will be offset by the like-priced sale of its printer business this week to HP, said Gap Intelligence analyst Scott Peterson.

But financial implications aside, it is unclear whether the battery issue will affect Galaxy’s standing as the world’s best-selling Android line, or spill into Samsung’s other tech and appliance platforms.

Peterson believes the company’s conduct during the recall will be critical in curbing any longer-term damage to its reputation. “While the recall is an alarming turn of events for its mobile division, Samsung is one of the largest electronics brands with an already tremendous mind share and loyal customer base, and connections between this incident are not expected to be drawn to other areas of its CE portfolio,” he told TWICE.

“The biggest blemish to its brand will be in the high-end smartphone space, where it competes as a technology leader, and every specification/feature or misstep is heavily scrutinized by advanced end-users,” he observed.

To win back both enthusiasts and everyday shoppers, Samsung is now “tasked with showing a stable Note7 and offering high-value loyalty-related marketing this season,” Peterson said. This will likely come in the form of increased bundle promotions with other high-demand CE items like TVs and wearables, a familiar strategy that plays toward the advantages of Samsung’s wide CE portfolio, he noted.

Another thing to watch for: Whether the manufacturer accelerates the launch of its next Galaxy flagship (S8?) to help offset the poor performance expected this season, Peterson said.

“While this will help, Samsung must be mindful if following this strategy, as a ‘rush to market’ is viewed as one of the root causes for the Note7’s exploding batteries,” he said.

Take Away

Samsung's conduct during the recall will be critical in curbing any longer-term damage to its reputation, said Gap Intelligence analyst Scott Peterson.

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