SAN FRANCISCO — Good news for a change from Samsung? Yes, it’s possible.
For months, Samsung Electronics has been synonymous with bad tidings. Prior to Wednesday’s expected introduction of the Galaxy S8 smartphone in New York, it’s been one steady drumbeat. Combustible Galaxy Note 7 devices. The head of the company indicted on bribery and embezzlement charges. Under siege from competitors with new smartphones.
Samsung’s flagship smartphone could go a long way toward making people forget about imploding phones and its leader, Lee Jae-yong, whose trial began this month in South Korea. The technology giant says Lee did nothing wrong and will be vindicated in court. Four other Samsung senior executives were indicted in February on the same corruption charges as Lee; three resigned.
On Friday, Samsung Vice Chairman Kwon Oh-hyun apologized for the smartphone maker’s recent scandals at its annual shareholder meeting in Seoul. “I apologize once again for the mistake with the Note 7 last year,” he said. “It was a failure that arose from trying new technology.”
On Wednesday, Samsung is betting a franchise product changes the corporate narrative. Analysts say the S8 should give Samsung a jump on rival Apple, which is expected to unveil a major refresh to the iPhone in September. Samsung skipped a phone launch at Mobile World Congress earlier this month, where it typically makes a splash, letting rival LG Electronics steal some of the limelight with its water-resistant G6 Android phone.
Wednesday will be Samsung’s first major smartphone announcement since the ill-fated Note 7 in August.
“It’s obviously been a tough few months for Samsung,” says Jan Dawson, head of Jackdaw Research. “Samsung could really use some big news that generates excitement and positive coverage. The S8 launch is the best near-term opportunity.”
If not for Uber’s recent stumbles, Samsung might be tech’s dysfunctional story of the moment. The global recall of 2.5 million Note 7s, at a cost of about $6 billion to the company, lost it not only mind share but market share.
Samsung smartphone sales fell 8% in the last three months of 2016 and nearly 3% for the year, according to market researcher Gartner. It was the company’s second straight quarter of declining sales.
As recently as early March, international travelers were still being warned to turn off their Note 7 devices before boarding flights.
It all might change, however, if consumers take a shine to the S8. The phone is already generating buzz with a new voice-driven digital assistant named Bixby, modeled on artificial intelligence and pre-installed with apps. Indeed, Samsung’s stock reached a record high in March thanks to strong semiconductor sales and the possibility of a major corporate restructuring.
“Whatever the stench was, the products are great, notwithstanding the Note 7 mistake,” says Matt Quint, director of the Center on Global Brand Leadership at Columbia Business School. “Samsung will rebound because (S8) is a franchise product and U.S. consumers probably don’t care about an unknown executive in South Korea.”
“Now, if it had been Tim Cook, that would be an entirely different impact,” Quint says.
Samsung also has the advantage of being an enormous company (revenue $179 billion in 2016) not wholly dependent on the sales of handheld devices. It boasts a constellation of consumer-technology divisions (high-definition TVs, semiconductors, Internet of Things devices, appliances) in addition to smartphones, which account for a third to half of Samsung’s consumer-electronics business.
“The S8 is very significant because Samsung’s smartphone is the master control point to the home,” says Maribel Lopez, founder of tech research firm Lopez Research. “It is connected to everything — (Samsung-made) TVs, refrigerators, lights. The phone is integral, she says, to the success of Samsung’s voice-activated services and Internet of Things strategies.
The success of S8, in turn, should erase “any lasting consumer damage from previous missteps,” says Jack Gold, a tech analyst at J. Gold Associates. “If products are good, and I think Samsung’s are, they will do very well in the market.”
Announcing anything — even a minor upgrade to a laptop — beats the alternative, analyst Dawson says. “It should at least put Samsung in the news for reasons that have nothing to do with battery flaws or fires,” he says.
“Samsung has a long history of products that didn’t catch on fire or blow up, and I’m guessing its future products won’t either,” Dawson says.
Follow USA TODAY’s San Francisco Bureau Chief Jon Swartz @jswartz on Twitter.
