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Samsung (SSNLF) just unveiled the best $800 smartphone money can buy. Sadly, there isn’t much pent-up demand for expensive, state-of-the-art mobile devices anymore.
The Samsung Galaxy Note 7 is full of the innovative features every smartphone buyer in 2013 dreamed about. It’s waterproof. It has a beautiful 5.7-inch quad-HD display. That means there are more pixels than the human eye can see even when the screen is pressed up against your face in a virtual-reality headset.
It is powered by the latest Qualcomm (QCOM) Snapdragon 820 chipset, the best one that the company makes. It has 4 gigabytes of RAM, both quick and wireless charging, and expandable memory. Samsung claims it will support SD storage cards up to 2 terabytes even though no such cards yet exist.
Its battery is about 17% bigger, which is always a good thing. It has the best camera on any smartphone. In fact, its crazy-fast autofocus is on par with many high-end DSLR cameras. It has a built-in fingerprint scanner. and if that’s not enough, it sports an iris scanner, too. How cool is that?
In 2013, it would have been very cool, mind-blowing even. The problem is it’s not 2013.
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People are keeping their old cellphones longer |
Although most of us can’t live without them, our smartphone-buying habits have changed. Executives in Shenzhen, Silicon Valley and Seoul know all too well that product life cycles are getting stretched as carrier, two-year contract subsidies die. Skipping a number – the new Note 7 replaces last year’s Note 5 – doesn’t change the reality for most of us, the phone in our pocket is good enough.
Samsung and Apple (AAPL) understand the implications. So far they’ve been able to stay one step ahead by focusing on premium phones. Together they dominate sales for the most innovative phones and almost all of the industry profits.
Unfortunately, they’re now competing with their own models from previous years and with smaller, hungrier Chinese rivals content to flood the market with high-quality yet low-priced devices. It’s a dangerous combination that usually leads to lower average selling prices and reduced profitability.
Apple recently reported its second consecutive quarter of lower iPhone sales. This came despite the usual aggressive marketing push and opening new stores all over China, its biggest market. It’s even more worrisome that sales of the new low-priced iPhone 6SE outpaced the pricey top-of-the-line 6S model. It tells you people aren’t willing to pay up for the latest innovation regardless of marketing. Although there has only been a modest decline in average selling prices so far, the migration down the product line can’t bring much cheer to Cupertino. It also foreshadows a nasty surprise in September when the 2016 iPhone comes to market.
Samsung came to the course-change realization sooner. It streamlined its entire product line to wring out economies of scale and pump up profits. For example, the new Note 7 uses the same cameras as its flagship Galaxy S7 and S7 Edge. It also shares the same processor, screen resolution and case design too.
The change is a slightly different screen curvature, perfected during the production of tens of millions of panels for the 2015 Galaxy and Note editions. In fact, learning to make those panels at scale after so many early problems might be the best thing to come out of the 2015 experience. It’s certainly having a profound impact on profitability.
Smartphone innovation is tricky in 2016. While engineers are still capable of nifty new features, buyers won’t upgrade to get them. The Note 7 is certainly cutting-edge, likely the best device money can buy. Yet that’s no guarantee it will sell well — not in 2016.
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OTHER TECH DEVELOPMENTS
Apple (AAPL) is still playing hardball with TV executives and still getting almost nothing it needs to launch a compelling service on Apple TV. Execs are not willing to let Apple dominate TV the way it dominated the recording industry with iTunes… For some strange reason businesses are having a rough transition to new chip-enabled credit cards. Oh, right, they’re still required to get a signature. So much for technology… Pokemon Go! has over 100 million downloads in less than a month… Facebook (FB) is now testing video ads that play during live podcasts. It may be just old school logic but that seems a lot like a commercial. … Google (GOOGL) just added a feature to its popular Maps application that allows users to automatically generate nearby areas of interest. You can begin to see how Maps will be monetized, perhaps aggressively and usefully so… IBM (IBM) is developing a chip that can scan for signs of cancer in the blood with amazing accuracy, cutting the costs from the diagnoses… Corporations spent the last several decades moving to the suburbs. Now they’re moving back to large cities because younger workers want to live there. Â Â
Best wishes,
Jon Markman
{ 14 comments }
If Samsung and Apple are waiting for me to buy one of these new fangled useless gadgets they can wait till hell freezes over. I would not take one for free. Fore the sake of disclosure I am 78 and IT challenged and poor.
I’m 76 not so IT challenged and not so poor, sorry you made the decisions during your life that caused you to be where you are.
@ karek40 – that was uncalled for.
Have consumers tired of new “bells and whistles” because of glitz fatigue, or are they become more frugal with their money as they sense another economic downturn is coming?
excellent article, thanks for sharing
I am one of those people who don’t run out and buy the newest smartphone at the launch. I usually try to make good use of phone until updates and battery life start to effect the way phone works. I am an Android phone fan versus the IPhone as a preference. I like to upgrade when I know the newest phone has worked out the problems that I have with the phone I have. Because I like the Samsung phones, sometimes choosing between the Note and the Galaxy versions becomes a tough decision. In that case,it comes down to the specs for the phone. Even though the Note has that nice large screen which is great for aging eyes,it doesn’t give me everything that the Galaxy does. I will probably be upgrading within the next 6 months from my Galaxy S5 to the S7 edge unless they have a S8 edge to consider. But I will have gotten my money’s worth out of phone. Keeping the phone longer makes the investment more reasonable cost wise, especially when I have kept phone in good condition (in a case covering even the screen ). I usually get something off for trading old phone in and I know that company will probably refurbish the old phone and re-sell it. Doing it this way (prolonging use of phone between upgrades) brings actual out of pocket costs down over the time period.
Surely high quality low priced technology is a good thing. Now businesses can lower their total costs while increasing proportionately their variable costs such as electricity which increases as their output increases.
Based on this I will replace my Note5 With Note 7.
Great article, thank you
To illustrate your point, just yesterday I was talking to a woman who bought the previous generation iphone for under $200, rather than blow a week’s pay on the latest generation. She was replacing a two-generation old iphone. Maybe the most notable thing is that she wasn’t fooled by the “free”-phone-with-a-contract scam.
Opps!, Apparently the Editor hasn’t read the latest reports… Samsung Note 7 has broken iphones record in pre-sales, yes that’s right people are placing orders and putting their money down on the Samsung Note 7 due to be available later this month. Sounds like people were just waiting for this great phone to become available and yes I held onto my older Samsung S4 Active for almost 4 years for this… Can’t wait!
I am 67, have old eyes and, as a former programmer, not technologically challenged. I have had a Note 4 which has served me well. IF I can get a 17% longer battery life, I will go for it. The apps keep getting better and better. I have a Dell touchscreen laptop and a MS Surface Pro 3. At this rate, with the smartphone apps getting better and better, both the surface Pro 3 and the 15 inch touchscreen 4K laptop with 16 Gig RAM and 1 terabyte SSD are going to be challenged. I will probably forego a replacement for the Surface Pro 3 and keep only a new smartphone and the (very) lightweight laptop as my only devices. Thus, I can see the better large screen smartphone with better battery life putting a lot of pressure on tablet-like devices.
Why do I still use my S3? Because nothing since has had such low SAR numbers, which aren’t perfect nor comprehensive but are all we have to go by in terms of relative safety.
When something new comes out that I want, I’ll go to whatever carrier gives me the best deal on it. VZ actually promises to punish me with additional fees for staying with them, so where’s the business sense in that???
What are the main differences between the note 7 and the galaxy s7 edge. ?
Which one is better for the money ? I think the note 7 costs about $100.00 more..