Samsung has unveiled a revamped model of its exploding Note 7 smartphone, the new Galaxy Note 8, as the South Korean phone manufacturer attempts to draw a final line under the disastrous product.
The launch of the Note 8 is a crucial moment for Samsung, which has been engulfed in corporate scandals over the past year even as it overtook iPhone manufacturer Apple to become the world’s most profitable technology company in the second quarter. Apple is expected to launch its new iPhone 8 next month.
Samsung’s high-end Note 8 will have a bigger screen than any of its previous phones and a more sophisticated stylus for written notes. It will also feature the group’s new voice assistant “Bixby,” which DJ Koh, president of the mobile business, said has become more sophisticated since it was first introduced in March.
Mr Koh told the Financial Times that Samsung believes the market for higher-end handsets such as the Note 8 would continue to grow, even as the broader market has slowed. “Everyone is saying that the market is saturated,” he said. “I believe the high-end market will increase, not increase as two or three years ago, but still increase.”
Kim Dong-won, an analyst with KB Securities, estimates the company will ship 3.5m Note 8 handsets in the third quarter and 7.5m in the final quarter of the year.
This compares with 20m shipments of Samsung’s flagship S8 device in the three months after it was released in April, according to analysts.
At a flashy launch event in New York, Samsung showed video tributes to Note 7 from customers. Last year’s debacle was turned into an advertising campaign at the event, with one customer shown saying: “RIP Note 7, it was fun while it lasted, you’re still my favourite phone.”
Analysts said Samsung was counting on a second chance from customers attached to the brand because of the phone’s large screens and styluses. A study by marketing group Fluent found 63 per cent of all the company’s mobile users said the Note 7 incident would have no effect on how likely they would be to purchase a similar handset.
“It’s striking how many long-term Note users who were unable to get the Note 7 or have had to return it have been holding out for this latest update,” said a research note from CCS Insight.
Samsung last month overtook Apple after reporting quarterly profits of $9.9bn on the back of roaring sales of memory chips and display panels. It has also eclipsed Intel as the world’s largest chipmaker — a crown the US group had held since 1993.
However, its business success abroad has been overshadowed by scandal at home. Lee Jae-yong, the vice-chairman and de facto head of Samsung, is in jail on corruption charges. On Friday, a court in Seoul will issue its verdict on the case, dubbed South Korea’s “trial of the century”. If convicted, Mr Lee — arguably the country’s most powerful man — could face up to 12 years in prison.
Analysts say the successful and safe launch of the Note 8 must be matched by wider cultural reform in the company.
“[The] most important thing is that while Samsung admitted to problems with its battery hardware and processes in the Note 7 . . . employees frequently tell me that Samsung hasn’t addressed a deeper issue, cultural reform,” said Geoffrey Cain, author of an upcoming book on the Korean conglomerate.
“Quite a few employees told me they were not surprised when the Note 7 phones started smouldering last year, pointing to Samsung’s breakneck work culture, the pressure they put on suppliers and a reluctance to speak up when something’s wrong. This is not good. Samsung is still in a fragile position.”