Huawei And Lenovo To Benefit From Galaxy Note 7's Failure

Samsung had killed the Galaxy Note 7 and left of a gap in their late 2016 product line up. The business was expected to sell around 19 million Galaxy Note 7 devices and is scrambling both to increase the production of the Galaxy S7 family of devices, so as to recover some of those lost sales, and of course to soothe upset would-be buyers and reassure people that their devices are safe. However, whilst Samsung is proving that it can still create brilliant smartphones, other smartphone manufacturers are - or should be - poised to take up the challenge. For 2016, Samsung has lost market share and this time it isn't to Apple: instead, we are seeing a number of Chinese smartphone manufacturers increasing their sales, as we can see from the embedded chart at the bottom of this article (noting that "Lenovo" has been spelled incorrectly). Chinese smartphones have dramatically improved relative with the rest of the market and some of these businesses are already selling reasonably well into developed, and not just developing, smartphone markets.

Two Chinese manufacturers appear better established to pounce on Samsung's missing Galaxy Note 7: Huawei and Lenovo, with Huawei appearing to be better positioned than Lenovo. Both companies would dearly love to steal a slice of Samsung's premium ($600 and up) smartphone market, which currently is largely dominated by Apple and Samsung devices. Compared with other Chinese 'phone manufacturers, both Huawei and Lenovo have premium handsets already in production and both have established relationship with developed market carriers. Lenovo's acquisition of Motorola from Google should stand them in good stead, but the company has been struggling to sell its smartphones: owing to a combination of absorbing Motorola into its business together with weakening device sales, earlier this year Lenovo reported its first full year loss this decade. By weaker, Lenovo's handset sales fell by 31% in 2016 compared with 2015 and Lenovo has reduced staff numbers by over 3,000.

Huawei is already the world's third largest smartphone manufacturer. According to IDC, Huawei has 12% of the Western European market share and has been on something of a charm offensive, especially in North America, for the last couple of years. It already builds the Mate range of devices, which with their large displays could be a ready switch for would-be Galaxy Note upgraders. Huawei also has a successful network business although has found some friction around that it is a Chinese business - some US carriers will not install Huawei-based networks for security reasons. Huawei's business is based around sub-brands: in 2014 it created the Honor brand, originally designed to sell devices direct to consumers but over time several carriers around the world have started selling Honor devices. We've also seen the Huawei HiSilicon semiconductor brand make some waves with their Kirin mobile chipsets.

Of course, Lenovo and Huawei will be joined by other businesses hoping to pick up some of Samsung's lost business. The new LG V20 might also be a natural replacement for the Samsung Galaxy Note 7 but LG have so far failed to achieve this, as the business sees the LG V20 as more of a niche product compared with their early 2016 flagship LG G5 device (which has struggled to sell). It will be interesting to see what manufacturers are able to step up and pick up where Samsung left off, if customers will decide to hold off an upgrade to see will do next, or if Apple's iPhone 7 Plus will benefit.

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About the Author
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David Steele

Senior Staff Writer
I grew up with 8-bit computers and moved into PDAs in my professional life, using a number of devices from early Windows CE clamshells and later. Today, my main devices are a Nexus 5X, a Sony Xperia Z Tablet and a coffee cup.