Google moves into hardware production with smartphone and other devices
Google is moving on the high-end smartphone world at a good time. Samsung, the world's top-selling smartphone maker, is dealing with a potentially brand-crushing crisis. First its new, top-of-the-line Galaxy Note 7 phones caught on fire; now the replacement ones are reportedly exploding, too. The Yonhap News Agency in South Korea reported eight cases of fires in replacement phones, five in the United States, one in South Korea and another in Taiwan.
The fallout has been clear: Slightly more than a third of Samsung smartphone owners said they would not buy another phone from the company after the Galaxy Note 7 recall, according to a survey from brand consultant firm Branding Brand, which conducted the poll before the replacements started catching on fire.
Meanwhile, Google's other rival in the mobile world — Apple — has been dogged by complaints that it is lagging in innovation. Many analysts who expressed that concern were not soothed by the latest iPhone, which took some small steps forward but also controversially ditched the headphone jack.
Google went out of its way to mock the iPhone when it introduced the $769 Pixel, noting that it's brand-new smartphone is cutting edge but retains its headphone jack. Google even bragged about its new shade of blue for its smartphone, which could be read as a parody of Apple's genuine excitement over its new shade of black.
But Samsung's slide, and the damage from its horrendous Galaxy Note 7 launch is perhaps an even greater gift to Google. Many people have turned to Samsung phones as the anti-iPhone preference of choice. With customers admitting they're getting wary about other models of Samsung phones — despite the fact that none have had problems anywhere near the scale as the Note 7 — Google's Pixel fits neatly into whatever gap Samsung leaves behind. Compounding those woes even more is the Galaxy battery fires are happening right before the holidays when smartphone companies do their best business.
"I think Samsung in their rush to get out the next product obviously didn’t study it well enough and now they are suffering the consequences of that lack of care," said Jeff Kagan, an Atlanta-area telecommunications analyst, in an e-mail. "This is devastating to Samsung and will continue to be devastating to Samsung."
While Samsung initially reported that the vast majority of Note 7 customers who traded in their phones were choosing another Samsung phone, anecdotal reports online indicate that is no longer the case. In fact, AT&T and T-Mobile said they were going to stop exchanging the Note 7 phones even before Samsung confirmed that it was halting all production of the phone.
Even Samsung said it can't fault them for that decision, in light of the scattered reports that the replacement phones are suffering from the same heat problems as the faulty phones they replaced. “We recognize that carrier partners have stopped sales and exchanges of the Galaxy Note 7 in response to reports of heat damage issues, and we respect their decision," Samsung said in a statement.
There's no guarantee Google will be able to swoop in and fill the gap completely. The Pixel phones are only available through Verizon, unless shoppers want to pay the full price for an unlocked version on Google's own store. Verizon is the nation's largest carrier, but the exclusive arrangement may limit sales.
Still, even if Google's own phone doesn't manage to be the iPhone alternative of the holiday season, the company will still likely see other Android manufacturers get a boost through the end of the year.
"While this is terrible news for Samsung, it may be great news for their competitors," Kagan said. "LG, Moto, Huawei and many other Android smartphones will quickly fill the gap left by this Samsung problem."
Staff writers Fred Barbash and Anna Fifield from Tokyo contributed to this report.