TECHNOLOGY NEWS Galaxy S8 vs. iPhone 8: Winning Has Little to Do With Phones

T he new Samsung Galaxy S8 has launched, and its target of

choice is the as yet unlaunched Apple iPhone 8 Anniversary

Edition. These phones are critical for both companies. Apple

survives largely off the iPhone today, and Samsung is trying

to recover both from its burning phone problem and from its

top executive being arrested on bribery charges.

Neither firm can afford a big loss to the other, and Samsung

just came out of the gate with one hell of an opening salvo.

A big difference is that Apple can focus on product, while

Samsung has to restore its image, and that is a far harder

thing to do.

I'll share some thoughts about this coming battle and close

with the closest thing in market to an iPod-like device,

although it doesn't play music. It's a printer called the

"Sprocket."

Apple's Problem

Apple's iPhone both surprised and, for a time, drove the

smartphone market. It helped wipe out Palm, forced

BlackBerry to make massive changes, and knocked the once-

dominant Nokia down to the third tier of mobile phone

players.

On the other hand, Apple's attempts at diversification haven't

gone very well. The iPad is no longer the PC killer it once was

thought to be, the iPod is all but gone, and the Apple Watch

was a disappointing misfire. (Ironically, it is still the most

successful single product in its class, suggesting an as-yet-

unresolved class problem.)

Apple no longer controls the smartphone market, though.

Control now is shared -- and firms using Google's Android

platform represent a significantly larger share. In this new

Android-led world, Samsung has been the company to beat.

Apple has had an amazing run recently, largely because

Samsung's halo phone, the Samsung Note 7, had a nasty

tendency to catch fire. Samsung didn't address that problem

well at all, leading to the phone being banned from planes and

ultimately recalled.

That didn't give Apple a sustainable advantage, though,

because Samsung didn't fail. That means the gains that

Apple got likely will go away once Samsung re-enters the

high-end segment and recovers its brand, which really is the

bigger problem. It has made a start -- recovering the phone is

what it just did.

The long-term problem for Apple is that Apple's margins are

industry-leading but Samsung's aren't. That means Samsung

and others can put more into their phones and still charge

less. That's why the S8 is so scary. It is a technology

showcase that Apple can't match unless it cuts into margins,

and Apple can't do that without collapsing its valuation.

In effect, Apple is between a rock and a hard place if

Samsung can execute -- but execution isn't easy.

Samsung's Problem

Thanks to the burning phones and a tendency for some of

Samsung's washing machines to explode of late, folks aren't

trusting Samsung much. This has resulted in Samsung having

to run an expensive campaign to recover its brand.

Having worked on a similar project at IBM decades ago, I

know this kind of problem is neither cheap nor quick to fix. It

took IBM millions and five years to recover its brand.

Samsung's market is both more forgiving and more fickle,

which suggests it could do it far faster, but I still think it will

take at least two years of solid execution and millions in

marketing.

This may not be helped by the fact it currently is selling

refurbished Galaxy Note 7s, which still are banned from

airplanes. Given that the failure was caused by a design

feature rather than a component problem, these phones still

could catch fire.

This seems like a continuation of the tactical thinking that

got Samsung into this mess in the first place, and if one of

these refurbished phones should catch fire, it could result in

a huge advantage for Apple.

It also suggests that the problem created cash liquidity

issues that likely resulted in this incredibly risky decision.

A lot of folks have speculated that if the new phone catches

fire, then Samsung is screwed. However, the reality is that

none of its phones can catch fire, because that will cause

people to disbelieve the message of a new, more quality-

focused Samsung.

So, the phone it launched may be up to the challenge of

restoring Samsung's brand, but the company's execution

appears to be falling short in other respects. It still could fail

due to the decision to resell the problematic Note 7s and the

sheer time it will take to recover its image.

Wrapping Up

With a healthy and well-executing Samsung, the new Galaxy

Note S8 could have done scary things to Apple's iPhone 8

sales, particularly because Apple simply can't afford to match

in its phone the kinds of advancements that Samsung has

showcased.

However, Samsung isn't healthy, and its decision to resell the

problematic Note 7 is a showcase of what has been a string

of excessive risks. An Apple supporter could rig a refurbished

Note 7 to catch fire in a critical location, and the risk that

Samsung represents could be removed. That's a hell of a

temptation for a lot of Apple employees and partners, even if

Apple management weren't involved in such a move.

Further, Apple just torpedoed Andy Rubin's iPhone killer before

it launched, suggesting Samsung should be thinking far more

defensively. Apparently, Tim Cook did pick up at least one

Steve Jobs skill -- and if Samsung doesn't watch out, this one

will bite it in the butt.

Unless Samsung suddenly gets a lot smarter, this round likely

will go resoundingly to Apple, despite what otherwise is a very

strong effort with its new S8 phone.

Against Apple, it generally is the execution, not the product,

that makes the critical difference, and Samsung remains

overmatched.