Galaxy Note 7: Samsung's business device faces high stakes

Samsung's Galaxy Note 7 is a business productivity tool that'll need to carry a lot of weight for the company as well as its enterprise competition with Apple's iPhone.

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Leaked image of Samsung's Galaxy Note 7.

@OnLeaks

Samsung's Galaxy Note 7 is a business-class smartphone and phablet that has much broader implications for the consumer electronics giant and its ability to break Apple's hammerlock on the industry.

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And, oh, by the way, the Galaxy Note 7, which is the follow-up to the Note 5, creates a trio of Samsung smartphones to combat the iPhone in both large and small companies.

More rumored specs, images leak of Samsung's Galaxy Note 7 | CNET: Samsung Galaxy Note 7: Everything we know about specs, release date and leapfrogging name

While there are concerns about the iPhone's sales ahead of the iPhone 7 launch, Apple clearly has a lock on the enterprise. As noted previously, some of Apple's corporate strength is apps and partnerships with IBM, Cisco, and Oracle. Some of Apple's enterprise mojo is security. And some is the reality that Apple is the new BlackBerry -- a safe device no CIO will get fired over.

Samsung, according to Tech Pro Research, is also in that league of safe smartphone purchases, but it faces an Android handicap of sorts on security perception.

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Samsung is in the league of safe smartphone purchases, but it faces an Android handicap of sorts on security perception.

Much of the Galaxy Note 7 details have already leaked, and the gist is that the device will have an Edge on the screen sides, an Iris scanner (welcome biometrics to the security discussion), and other software updates. In addition, the Note 7 unifies the Galaxy brand of devices and creates a dynamic trio to take on the iPhone.

And now for those expectations.

Samsung has a lot riding on the Note 7 and is betting that it can increase popularity of the Galaxy brand and preserve average selling prices -- even as it launches promotions to keep the S7 line selling well as the iPhone 7 launches.

According to Samsung Securities, which is not affiliated with Samsung Electronics, the Note 7 is expected to hold the fort for the company's high-end smartphone sales.

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Image: Samsung Securities

Samsung Securities calls the new Samsung flagship the Note 6, but you get the gist. Samsung is expected to sell six million units in each of the next two quarters.

On Samsung's second quarter earnings call, executives outlined the master plan for the Note 7. Robert Yi, head of investor relations for Samsung Electronics, said:

In the second half we plan to maintain the S7, S7 Edge prices continuously. We think that, by maintaining a consistent price policy, we are able to better maintain the trust of the channel in the overall market.

On the other hand, we will also be implementing very active marketing activities in the second half, to drive up actual purchases. By this, we plan to continue to maintain the overall sales trend of our premium handsets.

In terms of third-quarter ASP, given the fact that we're planning to launch the new large-screen flagship, and given the plan to maintain our prices for the S7, we expect ASP in the third quarter to improve, due to the improved product mix.

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In a slide deck to investors, Samsung said it will launch the Note 7, boost marketing and sales spending, and work to keep S7 sales going.

Add it up and the Note 7 has to be high-end enough to court enterprise customers, entice a bring your own device (BYOD) prosumer, fend off competition from all corners, and be a productivity tool.

What's the catch? I see the following hurdles for the Note.

  • The Galaxy Note franchise is strong, but pricing may be an issue. I have a Galaxy Note 5 and love the device. I'm also one of those increasingly rare birds that like to jot things down. As a productivity tool, the Note 5 works well for me, and the implementation of Knox is handy. The Note 7 is likely to refine those key features. However, the Note is a high-end and pricey device. How much is the stylus worth to you? We'll find out. Plans from US carriers make it increasingly clear what a device really costs. That cost will hurt the BYOD mojo for the Note.
  • It's still about the apps. Don't underestimate Apple's partnerships with the likes of IBM, Cisco, and SAP. Whether it's custom apps or interoperability deals, Apple is making it easier to adopt the iPhone and iPad in the enterprise.
  • Samsung, and other smartphone makers, are having a harder time getting customers to upgrade. It's unclear whether Samsung's features like a 5.7-inch screen, 12-megapixel scanner, and new Note and S Pen tricks will be enough to justify a purchase.

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