Apple’s iPhone 7 and 7 Plus were supposed to be among the biggest beneficiaries of the Galaxy Note 7 discontinuation. Now the most respected Apple analyst, Ming-Chi Kuo of KGI Securities, has said in a research note to investors that Apple will benefit the most from Samsung’s Note 7 debacle. Though Samsung wants the ex-Note 7 owners to buy its other devices like Galaxy S7, a large number of customers have lost faith in Samsung brand.
iPhone 7 to attract 50% of ex-Note 7 buyers
KGI Securities said the Galaxy Note 7 was estimated to get 12 million orders through the end of this calendar year. But the phablet was discontinued after the replacement devices were also found to be prone to catching fire. Now Note 7 customers have no choice but to choose another premium handset. Phones like LG V20 and Google Pixel are seen as strong alternatives to the Note 7.
Ming-Chi Kuo said, out of 12 million Note 7 orders, the iPhone 7 and 7 Plus will get about 50%. The analyst estimates that the new iPhones will attract 5-7 million Note 7 customers, while the remaining 50% will be shared among Android vendors like Huawei, LG, and Google. Users looking for a dual-camera support are likely to go for the iPhone 7 Plus or Huawei’s upcoming Mate 9.
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What type of Note 7 users are switching to iPhone 7?
Consumers who have switched from the Note 7 to iPhone 7 and 7 Plus are those who have lost faith in Samsung, like the dual-camera system, or have been former iOS users. Ming-Chi Kuo’s report is in line with other Wall Street predictions that Apple would win millions of additional customers from the recall of the Note 7. Drexel Hamilton analyst Brian White estimated that Apple could attract 8 million extra unit sales this year.
KGI Securities said that the Note 7-related benefits are “largely reflected in raised forecasts” for the iPhone 7. Ming-Chi Kuo estimates that it will take Apple 3-5 weeks to accommodate additional orders if Apple “does not expand the current production capacity of the iPhone 7 Plus.” Samsung is expected to bear a loss of $2.3 billion due to the Note 7 fiasco.
Huawei to gain the second biggest benefit
Kuo said in his research note that Huawei will be the second biggest beneficiary of the Note 7 debacle. The Chinese smartphone maker has a strong presence in China and Europe. Huawei is set to unveil its Mate 9 phablet next month in Germany. It will be available in two screen sizes, and the bigger of them will have a dual-edge display and support for Google’s Daydream VR platform. It will attract Note 7 users who want to remain in the Android family.
The analyst said the impact of the Note 7 discontinuation on Samsung won’t last very long. But if Samsung makes a similar mistake with the upcoming Galaxy S8, its brand image “will be hurt immensely.”