Samsung's (SSNLF) newest smartphone, the Galaxy S8, hits shelves today and investors are hoping sales of the phone will make up for the company's disastrous recall last year of the Galaxy Note 7 smartphone, which was known to overheat or catch fire.
The S8's key features include an edge-to-edge OLED "infinity" screen, a new Bixby voice assistant, an iris scanner and facial recognition.
Already, the South Korea-based electronics company says that pre-orders for the S8 have exceeded those of its predecessor, the S7, which was released last March, according to Samsung's mobile chief D.J. Koh. A report from South Korea claims that the smartphone has exceeded one million pre-orders in South Korea, the highest ever for a smartphone in the country. The phone was originally unveiled on March 29 with pre-orders being accepted starting April 7.
The company sees the Galaxy S8 selling a total of 60 million units this year, vs. about 48 million S7 units sold in 2016, according to the report. Earlier reports had said the phone had pre-sold 550,000 units in the first two days it was available.
Review of the phone came out this week and have mostly been positive. Gartner analyst Werner Goertz has been using the Galaxy S8 for a week and said he was impressed by it. The S8 doesn't have many revolutionary features, but its "Infinity" edge-to-edge display is stunning and feels good to hold, he noted. "I expect the device to do well in terms of making up for lost sales after the Note 7 challenge and more importantly, in regaining consumer trust and brand equity," Goertz said.
Samsung phone sales slowed in the 2017 first quarter, meaning there should be healthy demand for the S8, according to Gartner. "The pent-up market demand, in anticipation of the S8 will make for a successful launch," Goertz said.
HMC Investment Securities analyst Greg Roh said he also expects the S8 to outsell the S7 in terms of sales volume. He is expecting Samsung to sell 50 million units this year, which would translate to about $28.3 billion in sales.
Roh said the device's positive sales outlook comes down to three factors. First, it was able to differentiate the hardware with the removal of the physical home button and the edition of the iris scanner. Second, the timing is a plus for the S8 because iPhone sales are on the decline. And third, the replacement cycle of flagship Samsung phones has passed more than a year when the S7 was released in March because of the Note 7 disaster this past fall.
Jackdaw Research chief analyst Jan Dawson sees the S8 outselling the S7 for similar reasons, including the fact that sales that would have gone to the Note 7 will go to the S8, as well as the extensive update the S8 got in terms of design and features. "The S8 is a much bigger jump [than the S7] in terms of design and has some really cool new features that buyers will really go for," he explained.
While the Note 7 recall was the largest in Samsung's history, costing it a total of $5 billion, the company released a report in January claiming that just 330 of the three million Note 7 devices it sold had battery issues that caused them to overheat or explode. So most Samsung owners haven't experienced an overheating or exploding phone so the Note 7 issue won't prevent them from buying a future Samsung smartphone, Dawson explained.
"I honestly think most consumers have moved on from that, and Samsung has done a decent job of creating a really compelling new flagship this year at a time when there aren't any obvious leaders in the market among competing phones," he explained.
Rival Apple (AAPL) - Get Apple Inc. (AAPL) Report is also releasing what's expected to be a completely redesigned iPhone for the device's 10th-anniversary later this year. However, Roh said he doesn't see anticipation for the iPhone 8 cutting into the Galaxy S8 sales, particularly since a new report from Bloomberg claims that the expected September launch may be pushed back one or two months due to supply issues.
While chatter about the new specs on the highly anticipated iPhone 8 may sway some of the more well informed techies to hold out for its release, the average person will make their decision based on what's available today rather than what's coming, Dawson pointed out. In addition, people don't tend to switch between the iOS and Android operating systems. "But I'm sure Apple is happy that there are rumors aplenty about what it's planning," he said.