Apple and Huawei Will Benefit Most From Note 7's Failure, but Profit May Have Already 'Peaked Out'

Apple and Huawei will be the biggest beneficiaries following the discontinuation of Samsung's Galaxy Note 7 line, according to research conducted by KGI Securities analyst Ming-Chi Kuo. The two companies will mainly see orders increased by users looking for a smartphone with dual camera support, including Apple's iPhone 7 Plus and Huawei's upcoming Mate 9.

While Kuo believes Apple will benefit majorly following Samsung's troubled Note 7, the analyst also says that those benefits are "largely reflected in raised forecasts," and not as much in actual iPhone shipping numbers. Of the original 12-14 million Note 7 units expected to ship in 2016 before the exploding battery drama, Kuo estimates 5-7 million Note 7 users may switch to iPhone, mainly expected to be the iPhone 7 Plus.

iphone7waterresistance

Consumers that have switched from Note 7 to iPhone after the recall and halted production can be identified as having the following characteristics: (1) no trust in the Samsung brand anymore; (2) could be former iOS users; (3) like dual camera feature; and (4) like the subsidy packages of telecom operators (iPhone 7 and 7 Plus were the most promoted flagship models in September).

Because of this, the analyst believes Apple's biggest benefits of the Note 7 discontinuation have already "peaked out." It's estimated that it will take Apple between 3 and 5 weeks to accommodate additional orders of the iPhone 7, especially "if the company does not expand the current production capacity of the iPhone 7 Plus."

Right behind Apple, Kuo believes that Huawei will gain the second biggest benefit of the Note 7's failure, particularly due to its foothold in China and Europe. With the impending launch of the Mate 9 in the fall, the analyst looks at Huawei as the best alternative for Note 7 users who are leaving Samsung's smartphone lineup but seeking to remain in the Android family.

Ultimately, Kuo notes that while the impact of the discontinuation of the Note 7 will likely not last very long, if Samsung makes the same mistakes on the Galaxy S8 -- expected to enter mass production in Q1 2017 -- the analyst believes its brand "will be hurt immensely." It's expected Samsung will be more patient with the S8, however, since the smartphone's 10 nanometer production process is facing yield issues and as a whole the company will "make greater efforts with quality control" after rushing to production with the Note 7.

The Note 7's discontinuation began with a recall of the devices in early September following a few user reports of exploding batteries in the smartphone. After the recall, Samsung faced a series of unfortunate events as its shares plummeted, supposedly safe replacement phones began exploding, and a Bloomberg report painted it in an unfavorable light, indicating that the company rushed the Note 7 into production to do battle with Apple's iPhone 7.

Prior to launch, rumors that eventually became true were suggesting that the iPhone 7 would not receive a major design change, so Samsung could therefore benefit from being an enticing alternative to users on the fence. The Note 7 is now officially discontinued, banned from all United States passenger flights, and expected to cost Samsung around $2.3 billion, essentially erasing "all the mobile business profit" from the company's revenue for the quarter.

Related Forum: iPhone

Popular Stories

Mayday Calendar

Apple Acquisition Hints at Upgraded Calendar App on iOS 19 or Beyond

Friday May 9, 2025 9:13 am PDT by
Apple acquired Canadian startup Mayday Labs in April 2024, according to a European Commission listing, spotted by French blog MacGeneration. The acquisition had not received widespread attention from tech publications until now. Apple is legally required to report certain acquisitions to the European Commission, under the terms of the EU's Digital Markets Act. Mayday Labs founder Jeremy...
Nineth iOS 19 Feature

iOS 19 Beta is a Month Away With These New Features for Your iPhone

Thursday May 8, 2025 7:37 am PDT by
The first iOS 19 beta is just one month away, and there are already many new features and changes that are expected with it. Apple should seed the first iOS 19 beta to developers immediately following the WWDC 2025 keynote, which is scheduled for Monday, June 9. Following beta testing, the update should be released to the general public in September. Below, we recap the key iOS 19 rumors...
fortnite apple featured

Epic Games Submits Fortnite to U.S. App Store

Friday May 9, 2025 9:57 am PDT by
As promised, Epic Games today submitted Fortnite to the U.S. App Store, and if approved by Apple, it will mark the first time that the Fortnite app has been available in the United States since 2020. Fortnite will include options to purchase in-app currency from the web rather than through in-app purchase, which is what got the game banned to begin with. This time, though, Apple has been...
iOS 18

Here Are Apple's Full iOS 18.5 Release Notes

Tuesday May 6, 2025 2:17 pm PDT by
Apple today seeded the release candidate version of iOS 18.5 to developers and public beta testers, giving us a look at the final version of the update that will be provided to the public next week. With the release candidate, Apple provided release notes, so we have a more complete look at the new features that are included in the update, including those that weren't found during the beta...
AirPods Pro 3 Mock Feature

AirPods Pro 3 Just Months Away – Here's What We Know

Tuesday April 29, 2025 1:30 am PDT by
Despite being more than two years old, Apple's AirPods Pro 2 still dominate the premium wireless‑earbud space, thanks to a potent mix of top‑tier audio, class‑leading noise cancellation, and Apple's habit of delivering major new features through software updates. With AirPods Pro 3 widely expected to arrive in 2025, prospective buyers now face a familiar dilemma: snap up the proven...
top stories 2025 05 10

Top Stories: iOS 18.5 Release Imminent, iPhone Rumors for 2025 and Beyond, and More

Saturday May 10, 2025 6:00 am PDT by
With Apple's developer conference where it will show off iOS 19 just a month away, the company is wrapping up work on iOS 18.5 ahead of an imminent release to deliver a few new features and updates. This week also saw a number of iPhone-related rumors, encompassing not only this year's iPhone 17 lineup but also Apple's plans for 2026 and 2027, even as Apple's Eddy Cue suggested AI could make ...
Foldable iPhone 2023 Feature Homescreen

Apple's Foldable iPhone Display Tech May Set New Industry Standard

Thursday May 8, 2025 3:29 am PDT by
Apple's upcoming foldable iPhone will feature a new type of display panel developed by Samsung that has never been used in a foldable product, claims a source with links to Apple's supply chain. According to the account yeux1122 on the Korean Naver blog, the foldable iPhone will use a custom display process for which Apple will hold branding trademark rights, and that meets Apple's stringent ...

Top Rated Comments

gim Avatar
112 months ago
"the impact of the discontinuation will likely not last very long"

Strongly disagree with that. The damage that has been done to the brand Samsung is permanent.
Score: 14 Votes (Like | Disagree)
TroyBoy30 Avatar
112 months ago
I would think more would move to the upcoming LG V20 than the iphone

As the IT person for my company, I order all of our cell phones and upgrades. Most of our people have opted away from the iPhone now that they no longer have headphone jacks. It really seems to have struck a nerve with people. Personally, I feel the same way and can't blame them.
as an IT person for a company, you tell them what phone to get, not the other way around. Out of 1500 employees who upgraded to the 7, I've had zero even mention the headphone jack.
Score: 12 Votes (Like | Disagree)
62tele Avatar
112 months ago
As the IT person for my company, I order all of our cell phones and upgrades. Most of our people have opted away from the iPhone now that they no longer have headphone jacks. It really seems to have struck a nerve with people. Personally, I feel the same way and can't blame them.
LOL! You're joking right!? I know people who are already itching for the galaxy s8 and Note 8 or whatever it will be called. This is literally a blip on people radars.
You couldn't possibly be biased towards Samsung products could you?

That's fine. We all have our preferences. Let's see: no headphone jack vs an exploding phone.

BTW, how long do you think Samsung sticks with the headphone jack?
Score: 12 Votes (Like | Disagree)
Derekuda Avatar
112 months ago
As the IT person for my company, I order all of our cell phones and upgrades. Most of our people have opted away from the iPhone now that they no longer have headphone jacks. It really seems to have struck a nerve with people. Personally, I feel the same way and can't blame them.
Score: 10 Votes (Like | Disagree)
Derekuda Avatar
112 months ago
"the impact of the discontinuation will likely not last very long"

Strongly disagree with that. The damage that has been done to the brand Samsung is permanent.
LOL! You're joking right!? I know people who are already itching for the galaxy s8 and Note 8 or whatever it will be called. This is literally a blip on people radars.
Score: 9 Votes (Like | Disagree)
Stiss Avatar
112 months ago
Just another day here at kuorumors.com
Score: 9 Votes (Like | Disagree)