Galaxy Note 7 debacle may hit Samsung’s smartphone shipments target by 14 percent, revenues by Rs 6,500 crore in India, according to CMR’s impact analysis.
Samsung’s smartphone shipments target may fall short of 4 million units than its estimated shipments for the calendar year 2016, due to Galaxy Note7 battery issue that led to its recall and later halt of production worldwide.
This translates to Rs 6,457 crore in terms of revenues for the Korean company. As per projected growth, Samsung was expected to touch revenues of Rs 45,446 crore in 2016, an increase of 46 percent compared to previous calendar year. However, following the Note 7 issue, it can earn revenues of Rs 38,989 crore, which means a growth of 25 percent in revenues in 2016.
Samsung, however, will continue to maintain leadership in the smartphone segment in India, but its market share will shrink by 4.2 percent to settle at around 25.5 percent instead of estimated 29.7 percent.
“Though Note7 is a high-end premium Smartphone, the impact would be on Samsung spanning all across the segments. The issue is faced with the flagship model of the year that too around festive season, as a result, customers’ confidence is shaken,” said Faisal Kawoosa, principal analyst for Telecoms at CMR.
Earlier, Fitch Ratings said long-term brand damage from the recall and production suspension of Samsung’s Galaxy Note 7 phone is a greater threat to its credit profile than the direct financial impact, which will be buffered by ample liquidity and a strong balance sheet.
The problems with the Note 7 have raised uncertainty about Samsung’s handset operations, as the issues with the flagship model have highlighted weaknesses both in R&D capabilities and the company’s capacity to efficiently remedy serious hardware defects.
Note 7 and other potential Samsung handset customers may now chose Apple – SEC’s principal competitor in premium handsets – or mid-tier companies, if damage to the Samsung and Galaxy brands is sustained.
Industry experience, such as the decline of Nokia and BlackBerry, shows how manufacturers can lose market share quickly in the handset business. This is due to the fast pace of technological change and the frequency with which many consumers change their handsets, according to Fitch Ratings.
Samsung recalled 2.5 million Note 7 smartphones in September 2016 after a number of the units spontaneously burst into flame. All production and sales of Note 7 handsets have been stopped, and the model has been withdrawn.
Meanwhile, driven by the recall of Samsung Electronics’ Galaxy Note 7 smartphone over battery problems, South Korea’s exports of information and communication technology (ICT) products fell at the fastest pace in four months in September, government data showed Thursday.
ICT exports reached $14.53 billion last month, down 8.5 percent from $15.88 billion a year ago, according to the data compiled by the Ministry of Trade, Industry and Energy, Yonhap news agency reported.
