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This is going to be Samsung’s biggest problem next year

December 27th, 2017 at 6:15 PM
Huawei Mate 10, US launch, price vs Galaxy S9

Among all the manufacturers who make Android phones, Samsung is unique: it’s the only company that makes good money selling flagship ($600+) phones. Sure, LG and HTC make great devices, but they mostly serve as a figurehead for those companies to sell cheaper devices to people who don’t want to take out a loan to pay for a device. Try as they might, the rest of the Android industry has never had success in the most profitable part of the phone world.

So for Samsung, the absolute worst thing that could happen — barring another NoteGate, of course — is a serious contender emerging at the top of the Android ladder. No, I don’t mean a well-intentioned but under-resourced startup like Essential; I’m talking about the huge Chinese companies, Huawei and Xiaomi. They’ve sold flagship devices in the US before, but it’s always been restricted to online or big-box sales, which make up a small percentage of the total smartphone sales.

To sell a serious number of expensive phones in the United States, there’s one thing a phone company needs to do: Get into carrier stores. Not only do the big four phone companies have a huge number of physical retail stores nationwide, they also offering convenient 24-month installment plans or leases, which spread the high cost of expensive phones over two years, rather than pushing it into an immediate lump sum. For a lot of Americans, that’s a deal-breaker.

So that’s why a new report from The Information, which says that Huawei will sell its new Mate 10 phone through AT&T, is terrible news for Samsung. On paper, the Mate 10 could be a big challenger to the Galaxy S9, especially if the S9 sports a familiar/boring design that customers have seen before. The Mate 10 has features that have been a big selling points for Samsung in the past — like a physical headphone jack and front-mounted fingerprint sensor — while also adding things that the Galaxy S9 is rumored to lack, like a Leica-branded dual-lens camera setup.

The Information reports that Huawei is lining up a $100 million advertising drive to go along with the US launch of the Mate 10, and reports from Bloomberg also say that the company is in negotiations with Verizon to also bring the Mate 10 to that network. If Huawei can sell a Galaxy S9-rivaling phone through the two biggest networks, and make a big advertising push at the same time, it could cannibalize part of Samsung’s so-far-unassailable market share, and mark the first real competition in the Android world for years.


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