Samsung – Nasty origami

Huawei’s issues are likely to be just as bad.

• It looks like the majority of the screen failures on the Galaxy Fold are user errors but there are still enough other problems to warrant a delay to shipment while Samsung sorts them out.
• I doubt whether Huawei will fare much better.
• A whole slew of review units are showing catastrophic screen failures (see here) which strongly implies that the Galaxy Fold is not yet ready to be manhandled by the general public.
• At the heart of the issue is a plastic sheet that looks like a screen protector, but it is not meant to be removed.
• Many reviewers have removed the plastic sheet and have suffered catastrophic screen failure as a result.
• These screen failures cannot really be blamed on Samsung as the plastic sheet has obviously been placed there to strengthen the screen and should not have been removed.
• In the review units, this was not made clear which Samsung will now obviously rectify with stickers in large lurid letters.
• However, there are also some units where the protector has not been removed but are still showing problems.
• The Verge’s unit (see here) developed a bump under the screen that eventually caused the screen to fail while CNBC’s unit also suffered a catastrophic screen failure.
• Either way, the rate of incidents is much too high and in order to avoid massive return rates, Samsung needs to delay the shipment of this device until it knows exactly what the problems are and how to fix them.
• I suspect that this is what Samsung will do as it is still extremely sensitive after the Note 7 disaster which cost shareholders over $5bn in losses.
• This does not bode well for the other folding devices, but it represents an opportunity for Huawei to get one over on Samsung.
• While Huawei’s design is simpler as the fold is on the outside rather than the inside, it does have the issue of screen durability.
• Most smartphones today use tempered glass to protect the screen from scratching.
• On a flexible screen, this is obviously not possible which is why everyone is using plastic.
• The Mohs scale measures the hardness of materials (scratchability) and tempered glass scratches at level 6 with deeper grooves at level 7.
• Plastic, by contrast, scratches at a level 3 meaning that the screen of a foldable phone could end up being 3-5x more scratchable than a regular smartphone.
• Samsung has got around this problem by putting the screen on the inside so it is protected when closed, but Huawei’s is on the outside.
• If the screen is very easy to scratch, this will prove to be a problem no less serious than the one that Samsung is facing today.
• Huawei will be looking on at these events with glee, but I suspect that its device will have different problems which are no less serious.
• The net result is that foldable phones are not yet ready for prime time and will not be returning the smartphone market to growth any time soon.
• Hence, the outlook remains a slightly declining market in 2019 with stabilisation in 2020.
• With this key differentiator out of the picture, Huawei will continue to pressure Samsung’s profitability which I don’t see bouncing back anytime soon.
• The handset market is not a good place to be this year.