Weaker Galaxy S8 demand predicted by KGI, as phone lacks ‘sufficiently attractive selling points’

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KGI’s Ming-Chi Kuo talked about the Galaxy S8’s predicted specs and launch date but his letter to investors also contained bits foreseeing a weaker demand for Samsung’s 2017 flagship. Before we say anything else, we’re going to put this out there, as usual: these are analyst predictions, so take them with your usual dose of skepticism, especially knowing Kuo’s specialization on Apple.

A weaker Galaxy S8 demand would make sense, according to Kuo, because of the fact that this year, Samsung is expected to have two flagships. The company usually does so, but 2016 saw the retirement of the Note7, leaving the S7 and S7 edge alone for the entire year. In 2017, Samsung is expected to get back to its normal spring/autumn cycle and the August/September phone is expected to survive.

Another reason that leads Kuo to believe that there will be a weaker Galaxy S8 demand is the fact that the phone “lacks sufficiently attractive selling points (except full-screen design)“. On the opposite side of things, Apple’s flagship “could well be a bigger draw for consumers” because of its purported OLED screen,  wireless charging, new glass design, and function area.

“We project Galaxy S8 shipments of 40-45mn units in 2017, implying slower momentum compared to Galaxy S7 in 2016 (around 52mn units shipped)”, says Kuo. To the aforementioned reasons one more is being considered: “a one-month difference in comparable sales period“.

Check out below excerpts from the letter:

We project Galaxy S8 shipments of 40-45mn units in 2017F, implying slower momentum compared to Galaxy S7 in 2016 (around 52mn units shipped), attributable to:

(1) a one-month difference in comparable sales period;
(2) Galaxy S7 was Samsung’s main promotional flagship model in 4Q16 after termination of Galaxy Note 7 due to the battery explosion issue, hence the higher sales base;
(3) as Galaxy S8 lacks sufficiently attractive selling points (except full-screen design), the OLED iPhone could well be a bigger draw for consumers.

We are conservative on demand for Galaxy S8, and believe its contribution to the supply chain will be limited. Instead we recommend focusing on the sales outlook and supply chain momentum of Apple’s (US) OLED iPhone model.

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Anton D. Nagy
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