The Galaxy Note 7 was supposed to be a phone good enough for the history books, though Samsung probably didn't intend for it to land in business and marketing tomes as a teachable moment of what not do. The Korean company rushed production to beat the new iPhone, encountered a serious hardware defect that caused batteries to catch fire, and then fumbled its way through an inconsistent recall process. Completing the self-harm, Samsung's replacement Galaxy Notes started self-combusting just as the original ones did, and today the conclusion to this unhappy chapter was written by Samsung killing off its big-time smartphone. But accounting for the damage done by the Note 7 is only just beginning, and it'll be done under the colossal shadow of Google and its newfound ambitions as a phone maker.
At the time of the new Galaxy Note's arrival this summer, Samsung was a company on a roll. It had wowed both critics and the public with the Galaxy S6, S7, and their Edge counterparts, and it had delivered arguably the best smartwatch experience with the Gear S2. As hardware manufacturers go, it's hard to imagine anyone having as good and consistent a couple of years in public perception as Samsung was enjoying from late 2014 until now. But that was always Samsung's greatest vulnerability: being just a hardware manufacturer.
The Note 7 debacle undermines Samsung's singular attraction of awesome hardware
It's a truism now that to have success as a vendor of personal technology products, you need the holy trifecta of hardware, software, and services. If we can personalize the smartphone for a moment, good hardware is akin to having an attractive smile, winning software is like a great sense of humor, and valuable services are all the things you'd miss if he / she / it were gone. Samsung was only ever a one-dimensional winner on that triangle of prerequisites. Awesome specs, terrific camera, and some of the finest industrial design in the world, yes, but that was all hardware. And now Samsung has suffered through a month of bad publicity precisely about the reliability and safety of its hardware.
Of course, Samsung couldn't be the world's biggest smartphone maker if it lacked software and services, but aside from Samsung Pay, those have come almost exclusively from Google. Without Android and the Play Store, you'd have a Tizen phone — and those aren't selling in the tens of millions each month like Samsung's Android devices are. Put very simply, Samsung's formula for success was to ride Android and distinguish itself with unique products, whose advantage stemmed from its almost unrivaled vertical integration and ability to produce components others can't. Well, that crumbles into nothing when consumers don't trust your hardware to not blow up in their face.
Samsung's misfires may be something the company could recover from over time, perhaps, but there's a new spoiler arriving on the scene just in time to make matters much harder for the Galaxy line, and that's Google's Pixel phone. The premium tier of Android smartphones has grown uncompetitive in recent times, with Samsung rightly earning the lion's share of sales, profits, and public approbation. The Pixel was already en route to challenging that Galaxy dominance, but now Google's path toward competing directly with Samsung has been shortened and eased considerably.
Instead of having to answer tough questions about why people should consider a Pixel XL over a better-designed Note 7, Google can simply point out that the Pixel has newer and better software than the Galaxy S7, it runs on a faster processor, is the first to tap into Google Daydream, and will likely be supported with security and OS patches for much longer. The first-generation Pixel won't outsell Samsung's Galaxy lineup — Google's phone is only being released in a few countries and won't be available in three of the four big US carriers' stores, after all — but the marketing blitz and positive vibes around it will chip away at Samsung's position as the premium tier leader.
Things look bleak for Samsung on both the short- and long-term scale. In the immediate future, the company loses its centerpiece attraction for the holiday shopping season and will have to contend with shoppers who'll be conscious of explosive Galaxy phones — but likely less certain about the specific model to avoid, and therefore avoiding all of them. Those same shoppers will be exposed to at least one of Google's many nationwide TV spots for the Pixel, which is a ploy that will pay off for Google in the future, when Pixels will presumably be accessible to all potential buyers. And then, unlike Apple, which has the ecosystem stickiness of things like iMessage, Samsung will have no extra charms with which to keep people around. If its physical design and hardware aren't perfect or exceptional, it sinks.
Samsung's making it almost too easy for Google
Over the long run, Google's Pixel line will only grow in its distribution, marketing, and mindshare among the public. What we're seeing today is Google Phone 1.0, and future designs will gain in sophistication while Google continues to deliver unique software features like Google Assistant to its own hardware first. It'll be a slow and gradual strangulation, but Google looks well positioned to choke out Samsung's lead in the US and supplant it as the chief competitor to the iPhone, if it's able to execute its plan correctly. Yes, Samsung has sold upwards of 30 million Galaxy S7s in the country this year, but that was before it completely screwed up both its quality assurance and subsequent recall with the Galaxy Note 7. Hype matters, and it's all negative for Samsung today, with no immediate reprieve on the horizon.
The full extent of the Galaxy Note 7's damage won't be known for a while, however it's already certain that this phone's ghost will haunt Samsung for a long time. Apple is still the subject of jibes about its antenna issues with the iPhone 4, which was released half a decade ago, so we shouldn't expect Samsung to escape close scrutiny of its batteries for years to come. While that's going on, Google's proposition will only grow stronger and better known. No, Google won't topple Samsung's global empire, and least not anytime soon — but the two companies seem locked into trajectories that will see a new premier vendor of premium Android phones, and that might just be the original purveyor of Android itself.