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Samsung Mobile Division May Take Years to Recover

The undisputed king of premium segment Smartphone, Samsung Mobile facing the biggest hurdle posed by its own Samsung Galaxy Note 7 Battery Issue. It forced Samsung Mobile to recall millions of sold Galaxy Note 7 which they borrowed from car manufactuer to safeguard their image. The initial acceptance of  battery issue followed by ban by many Airline and regulatory body to carry Note 7 dented Samsung Mobile brand image dearly.

The persistent concern around battery blast post release of refined Galaxy Note 7 indicated that the problem is not limited to battery and it's more than battery issue.
At last Samsung Mobile pulled the plug and announced temporary halt of Samsung Galaxy Note 7. I already recommended long time back that Samsung should pull out from Note 7 to safeguard depleting brand image.

The news and print media came out with their reporting indicating the financial impact and threat to Samsung Mobile Number 1 position.
In my point of view, electronic gadget sales are based on Brand image and perception. Most of the premium brands take premium based on the their brand and buyers by buying the device because of positive perception that device quality must be good.

Any question mark on branding impacts sales in no time.we all must be aware that Samsung Mobile heavily contribute in Samsung Electronics profitability and cash flow.
The recall cost and potential fall in Samsung branded device may take Samsung Electronics in loss. It will lead to drastic cost cutting in resources segment to research and development segment.
Based on the report, Samsung sold 2.5 million devices in no time in high networth user geographies such as USA, Korea, Europe.  We also know that the buyers in these geographies are quality conscious and mostly buy the devices through their wireless service provider.
It automatically open an opportunity for Apple to fill that gap and gain additional revenue whereas Samsung loosing.

Most of the analyst predicted that Apple will closest the gap in premium segment but in my point of view Apple will throw out Samsung Mobile.
As Samsung Mobile don't have back up premium device and may take around 6 months to come out with new product will give enough time for its competitor to clean sweep the market.
The above challenges currently facing by Samsung Mobile will also drag Samsung Electronics share price as profitability will get the major hit. Samsung may move strategically to place S7 as their strategic flagship model by reducing the price to maintain the market share but it will be very difficult.

Even though Samsung comes out with new series of devices then also it will be tough job by Samsung to regain market share and command premium as brand perception really went from bad to worse.

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About Devendra Prasad

20 years plus industry veteran of domestic and international ICT domain with the expertise in Business, Technology, Strategy and Analysis. Specializes in forecasting impact analysis, trends and recommendations for Investments, Technology and Regulations.
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