The Decision To Halt Note 7 Production Could Impact Samsung’s Dominance. Here’s How

The last five weeks have not exactly been very good for Samsung. It recalled 2.5 million Note 7 phone sand has recently halted production of the phone on reports of the replacement phones catching fire again even in-fight. Thought temporary, it may have a long term effect on the financial outlook of the company.

Before this report, there was some good news from the company on Friday when it said it was still expecting a $7b profit for 2016.

Be that as it may, could the company’s smartphone market dominance be eroded going into 2017?

Well that would depend on a number of factors and first among them is how long the current crisis would last for. Bad news about a device in one market like the United States which has about the best consumer spending rates in the world, could be bad news for other markets. For example, major telecom companies in the US and now Australia have now said they won’t be offering the phone at least for now. Who’s to say Europe and by that I mean the regulation prone European Union (EU) won’t follow suit. China which is seen as a protectionist market may also seize on this to promote local companies like Huawei and Xiaomi.

Speaking of China, the last International Data Corporation (IDC) report which looked at global smartphone shipments in second quarter of 2016 saw Huawei’s market share grow 8.4% Year-Over-Year. While Samsung topped the table with 77 million phone sold as at July this year which gave it a 22.4% market share with 5.5% growth Year-Over-Year. Apple contracted 15% Year-Over-year but Samsung’s dominance was primarily driven by the number of devices it shipped in the same period. Thanks to Galaxy S7 and Galaxy S7 Edge, they were able to open a big lead over Apple which shipped 40.4 million phones in the same period.

But with reviews that the iPhone 7 and iOS 10 have received, Apple may well be on track to regain some of its glory as they hope to fill the void that the Note will very likely create. It’s not just the iPhone 7 that’s looking to dethrone Samsung, Google has now launched its own “made by Google” Pixel Phone. This phone is already the best with respect to camera quality and updates will be done directly on Google among other benefits.

While it may take a while to push Samsung off, it’s almost certain that its market share will eventually shrink further going into 2017 and if the trend continues, it could be dethroned eventually.

Overall though, smartphone shipments are declining globally as more people prefer to stay on their current device a little longer for reasons that range from the economy to a flurry of options.

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