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Summary

Samsung has announced its latest flagship smartphone, the Note 8. Known for its distinctive large display and stylus, the Note range is primarily aimed at enterprise customers and prosumers. This Note product is highly anticipated following the dramatic recall of last year's Note 7 owing to battery faults.

The Note 8 will rise above the controversy of its predecessor

The Note 8 is unquestionably an excellent device but the key problems for Samsung are not to do with the hardware of its current range of devices. Overshadowing the launch of the Note 8 was the specter of the Note 7 battery faults and the subsequent recall. Samsung's brand was thought to have suffered severely due to the recall, but in the year since, Samsung's smartphone sales have not suffered. Its Mobile division's second quarter revenue grew by 23.5% year on year driven by the Galaxy S8.

While the Note 8 will doubtlessly face some questions from both the press and the public about the safety of its battery, the public has largely forgotten about the Note 7's problems. Samsung has built up enough goodwill over the past 10 years of selling smartphones to weather one storm. The Note also filled a very specific niche in the handset market, one that is not truly filled by any competing device – a premium smartphone with a large display and stylus. There is a group of Note loyalists that chose to delay their upgrades after last year's recall rather than purchase a competing device. The result is the Note 8 could in fact see a boost in sales beyond what would be typically expected.

The Note 8 is controversially priced, at a significantly higher price than the Galaxy S8. Ovum believes this move is the correct one and will benefit both the Note and Galaxy ranges. It places clearer distance between the two ranges, which makes them easier to sell side by side. With the two ranges sharing more and more design and software elements, creating such a distinction is vital to not confuse consumers and even retailers. Apple raised the pricing expectations with the iPhone 7 Plus, which gave Samsung the room to raise its own prices as well.

The Note 8, however, also reveals the weaknesses in Samsung's capabilities. Its digital assistant Bixby is being quickly rolled out to more than 200 countries after launching in just two markets, but still only supports Korean and English. Bixby, however, is not nearly as feature-complete as competing services; in particular, Google Assistant is a problem because it also comes preloaded. The rapid expansion also raises worries about the language capabilities of Bixby. Chinese support is in the works, but is still not ready. Other major languages such as Spanish are still far off. Samsung could easily end up turning consumers in certain countries against Bixby by pushing rollout before proper local language support is ready. Samsung will host its developers' conference in mid-October where it will likely debut new features for Bixby.

Appendix

Further reading

Mobile Handset Forecast: Sales, Installed Base, ASP, and Revenue, 2016–21, TE0004-001127 (November 2016)

Devices Review 4Q16: Wearables, Drones, and Exploding Phones, TE0004-001109 (November 2016)

Author

Daniel Gleeson, Senior Analyst, Consumer Technology

daniel.gleeson@ovum.com

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