Samsung officially recalls the Galaxy Note7 in North America – by Jan Dawson
Samsung has finally issued an official recall of the Galaxy Note7 phone in North America, working with the US Consumer Product Safety Commission. This follows several weeks of informal recall activity, with Samsung encouraging owners to return their devices to retailers in exchange for refunds or alternative devices. The official recall formalizes the process but will hopefully also raise awareness, as only a small portion of owners have complied with the instructions to return their devices up to now.
The whole Note 7 problem couldn’t come at a worse time for Samsung. It has completely hamstrung its ability to compete with Apple’s new iPhone 7. Rather than being out for several weeks ahead of Apple’s devices and benefiting from the strong reviews, Samsung is now unable to sell any Note 7 phones through the pre-order period for the iPhone 7 and much of the first week of retail sales. That’s going to put a big dent in Note 7 sales and, given Samsung will have to focus on replacing devices already sold when its inventory starts to ramp up again next week, it’s quite possible the phones won’t be available to first time buyers for some time to come.
To its credit, Samsung acted quickly once it was clear there were significant and widespread problems with the devices but its recall hasn’t been successful in getting people to return them in large numbers. At the same time, Samsung’s messaging around the recall has been inconsistent and even misleading at times, with them at first promising new devices would be available within days but, more recently, pushing the date back to September 21st.
The bigger damage – as Tim Bajarin wrote earlier this week – is the lasting damage to the brand. Samsung’s reputation for customer services has taken some knocks previously across its various product lines and, without a direct face to customers in the US equivalent to Apple’s retail stores, it struggles to communicate with customers and give them somewhere to go with their concerns. Instead, those concerns have to be managed by wireless carriers and consumer electronics retailers, most of whom have no incentive to sell customers another Note 7. Many customers will end up buying other devices, including iPhones. Obviously bad news for Samsung.
There’s no doubt Samsung will recover eventually, though there will be some after effects. But when it comes to Note 7 sales, it’s now a certainty Samsung will sell far fewer than it would have hoped to and the costs of the recall and the lost sales will be significant. That’s particularly sad given Samsung has largely righted its smartphone ship recently and begun making some progress in terms of sales and profits. These problems will now set those efforts back for at least a quarter and probably more.
A Tough Week for Wearables – by Carolina Milanesi
Unless you are Apple, Fitbit, and maybe Samsung, this week seems to have been a tough week for wearables. Two unrelated news items point to an industry struggling to make this new set of devices really compelling to consumers.
Will We See a Microsoft Band 3?
On Wednesday, ZDNet reported the team working on Microsoft Band to run Windows 10 is no more and there are no plans to bring to market a new Band this year. Microsoft then issued a statement saying it will still support its Health platform and will continue to sell Microsoft Band 2. If this were not enough reassurance, on Thursday Microsoft changed the name of the health app on iOS, Android and Windows Phone to Microsoft Band.
Not seeing a Band 3 by the end of the year would not necessarily be a bad thing. Microsoft is clearly not interested in the wearables market as a way to drive revenue from hardware. There are two things that matter to Microsoft: showing off the cloud platform and engaging consumers with a much more personal device than a Surface. While the first one is a clear asset and one that is appreciated by the current Microsoft Band owners, in order to take advantage of it from a big data perspective Microsoft needs a larger number of users than what it currently has. However, the design of the Band did not appeal to many users and the sophistication of the data provided is more than most current consumers looking at wearables are interested in.
In other words, Microsoft Band was too early for the market. Consumers are certainly interested in health and fitness, as we have discussed on a few occasions over the past weeks, but their requirements are actually pretty basic. A recent survey we ran in the US points to the vast majority of consumers wanting information on their caloric intake and activity level and not much else beyond that.
Microsoft could go back to the drawing board from a design perspective but educating the market requires a lot of effort. Effort it might leave to its competitors and then come in and say, “We can do that and more.”
I very much doubt Microsoft will entirely abandon wearables as they offer a good platform to Cortana, especially as Microsoft cannot rely on its own mobile phones and data points to a low uptake of Cortana on non-Microsoft smartphones.
No New Devices Coming from Google’s Key Android Wear Partners
LG, Huawei, and Lenovo all confirmed to CNET this week they are not planning to launch any new wearables before 2017. I guess they do not expect consumers to flock to the stores over the Holidays to buy smartwatches. As I discussed in my IFA article last week, it was quite telling that a show that has been the stage to important wearables launches in the past only had Samsung unveil a new product this year and it does not run Android Wear.
Sales outside of Apple and Samsung have been pretty limited as have been Android Wear developments. It seems to me Google has bigger fish to fry with Home and Daydream – things consumers are actually excited about – than trying to convince consumers they really need to buy a smartwatch. I would also argue that, considering how tepid the response from developers has been on WatchOS, it does not bode well for the Android Wear camp. Historically, developers have chosen to go iOS first and, with the new enhancements coming from Apple Watch Series 2, I would expect them to speed up their development there. So, even if Android Wear could improve, users might be faced with limited apps that would curb the value of a smartwatch over a fitness band. A fitness band which, on average, is $100 or more cheaper than a smartwatch.
Given how slow the uptake has been, unless you have resources like Samsung, you need to pick what you are focusing on and vendors are wise not to rush to deliver something for the Holidays that is not that different from what they had last year. Between Apple and Samsung’s marketing, their effort would be more than likely wasted.
The bigger question is whether or not waiting for 2017 will make the market any more receptive. Most vendors believe having cellular connectivity will make a big difference in uptake but I remain highly skeptical this is what consumers are really waiting for.
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