Samsung’s Galaxy S6 may have been a critical and commercial disappointment, but the Galaxy S7 doesn’t appear to be following in its footsteps. Shipments are brisk enough, in fact, that analysts of the Korean smartphone maker have seen fit to raise first-month sales estimates from 7 million units to 9 million — triple those of the S6 and S6 edge over the same period. That has the company optimistic about its first-quarter earnings. In a preview released today, it anticipated a jump in operating profits of $5.7 billion, up 10 percent year over year.
The preliminary news is a much-needed positive for Samsung, which has faced increased pressure from investors in light of successive quarterly revenue, net income, and smartphone market share declines. “The S7 sales are extremely encouraging,” Samsung executive vice president Rhee In Jong told Bloomberg in a March 21 interview. Greg Roh, a market analyst at HMC Incestment Securities, told USA Today that the S7’s initial sales “[were] least 1.5 times better than the Galaxy S6.”
Shares of Samsung rose 2 percent on Wednesday, and have risen 4.4 percent since the Galaxy S7’s release on March 11.
The S7 and S7 edge’s release date, cheaper price, and highly sought-after features are apparently to thank for its early success. The company launched the S7 models on March 11, a month sooner than it launched the Galaxy S6 in April of last year. “With the high-end smartphone market largely stagnated, the issue is no longer about what ‘Wow’ features the new phone has,” Daishin Securities Co. analyst Clair Kim told Bloomberg. “Rather, it’s about who can bring out the phone quicker.”
Samsung also launched an annual phone upgrade program and opted not to raise the Galaxy’s pricing this year, angling to avoid sticker shock among both first-time buyers and phone owners looking to upgrade. And the company focused on making desirable, tangible improvements upon the Galaxy S6: the S7 features a waterproof design, SD card slot, innovative camera, and longer battery life.
Another factor contributing to the S7’s sales success? Despite its technological superiority over the S6, both S7 models are apparently as much as 8 percent cheaper to manufacture. And so far, Samsung’s managed to avoid the component shortages it suffered last year as a result of unexpectedly high demand for the S6 edge.
Analysts, for the most part, seem confident the S7’s upward sales trend will continue. “We expect Samsung’s Galaxy S7 to be the world’s best-selling Android smartphone in 2016,” Neil Mawston, executive director of market firm Strategy Analytics, told Bloomberg. In recent survey by the publication, 13 of 19 analysts predicted that Samsung’s first-quarter operating profits would top $4.8 billion, a 4 percent jump from the same period a year earlier. “We attribute the better-than-expected operating profit to robust sales of the Galaxy S7,” Mirae Asset Securities Co. researcher told Bloomberg.
Some market watchers believe the Galaxy S7’s success will influence future Samsung device releases. “We expect [the company] to release the Note 6 a month or two before the Apple iPhone 7, to try and grab that window of opportunity,” said Mawston. If the S7 continues to perform as well as it has so far, that may well be the case.
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