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Samsung Fold Disaster Extends to 60% Q1 Profit Drop for Nightmare 2019

Samsung Fold Disaster Extends to 60% Q1 Profit Drop for Nightmare 2019


Samsung cannot afford to release another poorly-designed product after 2016’s Samsung Note 7 disaster. | AP Photo/Kelvin Chan

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By Following a shock 60 percent drop in profits by Samsung Electronics as reported by FT, woes for the South Korean technology giant continued as the Samsung Galaxy Fold, a $2,000 device released to the market this month, demonstrated serious problems in a scandal that’s been dubbed #peelgate.

After one day of use…

— Steve Kovach (@stevekovach) April 17, 2019

Is 2019 a Write-Off for Samsung?

Not quite. Samsung Group, the biggest conglomerate in South Korea, represents some of the largest companies in virtually every imaginable sector such as insurance, car manufacturing, credit card, biologics, display manufacturing, and financial services.

As such, when Samsung disclosed that its operating profit fell 60 percent in the first quarter of 2019, which surprised many investors, the stock price of Samsung only fell by around 3.5 percent.

But, the public image of Samsung as the leader in smartphone innovation is highly likely to deteriorate after #peelgate, a scandal that may affect the performance of Samsung Electronics throughout 2019, despite the technological breakthrough made by the company.

#Peelgate: Samsung’s Nightmare

For Samsung, the launch of Galaxy Fold, a device that has been highly anticipated since 2018 as a true breakthrough in smartphone development, was a big deal.

Although Huawei stole some of the allure of Samsung when it released its own foldable device, reported problems in the folding technology of Huawei’s decide further fueled the demand for and interest in the Galaxy Fold.

However, as reported by publications including The WSJ after receiving review units from Samsung, the Galaxy Fold posed some serious problems for users.

PSA: There’s a layer that appears to be a screen protector on the Galaxy Fold’s display. It’s NOT a screen protector. Do NOT remove it.

I got this far peeling it off before the display spazzed and blacked out. Started over with a replacement.

— Marques Brownlee (@MKBHD) April 17, 2019

As soon as the protective layer of the device, which users could mistakenly consider it as a normal screen protector, was removed, the device began to show signs of a malfunction.

“The protective layer is part of the display structure designed to protect the screen from unintended scratches. The main display of the Galaxy Fold is made with a new, advanced polymer layer and adhesive that is flexible and tough enough to endure repeated folding actions. Because the main display is made with polymer, the extra protective layer is in place to guard against impact. It’s built into the display which is why it should not be removed by force,” Samsung reportedly said.

Bottom line, according to Joanna Stern, a personal technology columnist for The WSJ who reviewed the Galaxy Fold, the device was not ready to be released to the public just yet.

“It was then that I made a call, too: There’s no point in me writing a straightforward review of a product that’s so clearly not ready. I wasn’t going to recommend the phone—but now I’m concerned that it is even coming to market. At the very least, Samsung owes its customers more explanation. Are we beta-testing a prototype here?” asked Stern.

Plateauing Smartphone Development

Smartphone innovation has plateaued since 2018 and major phone makers like Apple have struggled in key markets such as China wherein competitors with more affordable devices have started to take away the market that was once dominated by Samsung and Apple.

For Samsung, the release of the Galaxy Fold could have been a strong statement to competing smartphone manufacturers that there is enough room for smartphone technology to grow and that Samsung could compete with technology.

Samsung may still be far ahead of the pack and the public certainly seemed to be satisfied with the company’s ambitious decision to lead the market with innovation and development.

But, the timing of the #peelgate, merely weeks after an unexpectedly weak quarterly performance by Samsung Electronics, was not ideal for the phone maker and it remains to be seen whether the sales of Galaxy S10 could salvage 2019 for the company.

About The Author

Joseph Young

Hong Kong-Based Finance and Cryptocurrency Analyst. Contributing regularly to CCN and Hacked. Providing unique insights into the crypto and fintech space since 2012.

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