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iPhone 7 vs Galaxy Note 7: Here’s a Scary Thought for Apple Inc…

Apple Inc. would have faced a much worst situation than Samsung is in right now with its terrifying phone battery explosion issues. The battery of Samsung’s Galaxy Phones have left the Korean electronics giant baffled, but the scenario would have weighed more heavily on Apple in the same case, says a report from MarketWatch.

Apple too much dependent On iPhone

The iPhone alone represented 57% of Apple’s total sales, and after including revenue earned from the iPads, the percentage hikes to 67%. Currently, Apple Inc. ’s business model is highly reliant on its handheld devices, but in the past year, the tech giant has made acquisitions and hires indicating that it is diversifying into things like augmented reality, smart cars and television, notes MarketWatch.

Apple Inc's Apple Store NASDAQ:AAPL

 

In addition to flagship products such as the iPhone and iPad, the Cupertino-based firm is amplifying its revenue from services and apps, like Apple Music and Apple Care as well. This year, revenue from these services superseded the sales of Mac for the first time to become Apple’s second-largest (First is iPhone) source of revenue.

However, it should be noted that the growth of services is subjected to its devices working properly, says MarketWatch.

Samsung to suffer short-term damage

On the other hand, Samsung has a highly diversified business that includes smart appliances like television displays, refrigerators, and a chip-making unit. Samsung’s IT and mobile communications division, which includes Galaxy line of tablets and smartphones posted revenue 25.56 trillion in the last quarter, representing 52% of the total sales.

Macquarie Research analyst Daniel Kim said the discontinuation of the Note 7 may affect the profits of Samsung’s mobile-phone unit in the short-term, but there will be “little collateral damage” to the component division. Kim maintained ‘Outperform’ rating on the Korean firm, stating that in the worst case scenario, Samsung will take a hit of 1.4tn Korean won (~$1.2bn), which will be contained in the current quarter itself.

But, how much will this explosion saga hit the brand, is however, not quantifiable. Rob Frankel, an independent brand strategist said, “Product disasters for brands are not all that uncommon. Most of these things, believe it or not, don’t do very much lasting damage at all. You have to be pretty evil or cause a lot of damage for the public not to forgive you.”

Kim said that as long as the issue is of passing nature and can be fixed, there are no big concerns. Same logic would have been applied to Apple Inc. , had the iPhone maker found itself in similar situation. But, since Apple offers only one or two models at a time, it would have felt the pain a bit more.

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Aman is MBA (Finance) with an experience on both marketing and Finance side. He has work as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, playing PC games and cricket.

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