What lies ahead for Samsung after the Galaxy Note 7 recall?

Author: Vijay Michalik, Research Analyst, Digital Transformation, Frost & Sullivan

Seeking to capitalise on Apple's lower impact iPhone 7 release, Samsung may have pushed for greater capabilities and faster production in the Note 7 'phablet' line. Their commercial success with older Samsung Galaxy Note devices saw the smartphone industry move to larger screen sizes en masse.

Samsung had been expecting to substantially increase its smartphone market share in 2016 led by the success of its S7 and S7 Edge phones. However, this latest development effectively kills the impact of the Note 7 phone on these figures. Samsung has grown new revenue streams in wearable technology, virtual reality and the internet of things across the last few years which add to its competitive differentiation. While its smartphone lineup stretches from the high end Galaxy 7 line to mid-range handsets, the knock-on impact of the failure of a flagship phone will be significant.

It has only been weeks since Samsung announced the recall of 2.5m handsets - the largest ever recall in the smartphone industry at a cost of hundreds of millions of dollars. Damage control at Samsung will face an uphill battle to redeem the company's tarnished image owing to the dangerous and dramatic nature of the phone's failure. Rumours suggesting that Samsung might move its release of the Galaxy S8 forward from February 2017 have been discredited.