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Phone maker unveils new flagship device after brand took hit from Galaxy Note 7

By Timothy W. Martin 

NEW YORK -- Samsung Electronics Co. unveiled a new flagship smartphone on Wednesday, its first product launch following last year's Galaxy Note 7 debacle.

The South Korean tech giant's new phone, the Galaxy S8, is loaded with consumer-pleasing innovations. The device is longer and slimmer than prior premium models. Its "infinity display" screen extends to the top and bottom edges, as well as side to side. It unlocks via a touch-screen home button, full-face recognition or a fingerprint scanner on the back of the device. An earphone jack is included.

The question is how much trust it will restore in the world's largest smartphone maker after Samsung's bungled global recall of the Galaxy Note 7 last year. Faulty batteries led some of the devices to ignite, rattling customer trust and bruising Samsung's chic brand. Poor communication with U.S. regulators led to further confusion and delays in getting refunds and replacement devices into customers' hands.

The fiasco ended up costing Samsung $5 billion. And it left an opening for rival Apple Inc. and its iPhone to vault past Samsung in global smartphone shipments during the last three months of 2016 -- the first time in five years that Samsung had slipped to No. 2, according to Strategy Analytics, a market researcher. Samsung remained the leader for the full year, shipping 309.4 million devices versus Apple's 215.4 million.

Bouncing back from immolating smartphones isn't the only challenge Samsung faces. The conglomerate's de facto leader and its founder's grandson, Lee Jae-yong, has been jailed for his alleged role in a bribery scandal rocking South Korea's business and political elite. Mr. Lee has denied wrongdoing; his trial remains in the early stages, with a verdict expected by May.

Samsung's tangled ownership web has drawn criticism from South Korean politicians, regulators and foreign investors, many of whom are urging a shake-up for family-run conglomerates like Samsung. If their efforts prevail, the grip Mr. Lee has over the Samsung empire could loosen further.

No wonder the Galaxy S8 is Samsung's most closely watched product launch in years. "If the product is really good, it will help bring back the loyalty and trust in the Galaxy brand," said Samsung's mobile chief, D.J. Koh, in a meeting at the Galaxy S8 launch event here.

AT&T Inc., Sprint Corp. and T-Mobile US Inc. plan to offer the Galaxy S8 at a starting price of $750; Verizon's starting price is $720. The Galaxy S8+, with an even bigger screen, would cost about $100 more. Phones will hit shelves on April 21; a Samsung spokeswoman said preorders will begin Thursday.

Despite the Korean conglomerate's many battles, shares of crown jewel Samsung Electronics are trading near all-time highs. In January, the Suwon-based company posted its best quarter of operating profit in three years, driven by booming sales at its components business.

A drama-free launch for the Galaxy S8 would go even further toward relieving headaches if it helps Samsung's mobile division rebound. The new phone would have five months of sales before the expected release of the 10th-anniversary iPhone in September. A speculative frenzy around that launch is being fueled by analysts' predictions that the new iPhone will mark a major advance in the device, including possibly a new size, an upgraded display, facial recognition and wireless charging.

Analysts expect the new iPhone to be priced at $1,000. Visions of strong sales have helped drive Apple's stock to record levels.

To counter Apple, as well as from lower-cost rivals gobbling up market share in China and India, Samsung will lean heavily on the Galaxy S8's new virtual assistant, Bixby. Similar to Apple's Siri, it uses artificial intelligence to field tasks, some of which are more complex than those handled by rival AI assistants. Bixby, for example, can complete multiple tasks with a single voice command, such as locating a nearby steakhouse and hailing a taxi.

In January, Samsung's monthslong investigation into the Galaxy Note 7 debacle traced the overheating to battery manufacturing problems and design flaws.

To avoid a repeat, Samsung has adopted an eight-point quality plan and added other safety measures for the Galaxy S8. In a break with previous launches, the device doesn't feature a more-powerful battery; Samsung employed cutting-edge 10-nanometer chips that take up less space and work the battery less strenuously.

"It could have happened to anybody," said Samsung's Mr. Koh, referring to the Galaxy Note 7 malfunctions. Samsung's investigation into the battery problems yielded "tremendous data that we believe will be important for all our products," he said.

Smartphones' once-blistering growth has cooled, but the devices remain critically important for the fortunes of Samsung, Apple and Google-parent Alphabet Inc. Phones represent the technological fulcrum connecting people's cars, devices and homes.

The Galaxy S8's predecessor device, the Galaxy S7, is Samsung's best-selling phone, with shipments of 49 million, according to IHS Markit.

The Galaxy S8 will be the first smartphone with the ability to link Samsung's vast portfolio of internet-connected televisions, washing machines, refrigerators and other home appliances.

"The Galaxy S8 isn't just a new smartphone, but a new kind of smartphone, " said Justin Denison, senior vice president of product strategy at Samsung Electronics America, during the launch event at New York's Lincoln Center. During its presentation and on banners outside the building, Samsung showed how mobile phones evolved from bulky devices with antennas in the 1980s to the sleek contemporary smartphone.

The Galaxy S8's two sizes both have big screens: The smaller Galaxy S8 has a 5.8-inch display; the bigger Galaxy S8+ has a 6.2 inches screen. "You can barely tell where the screen ends and the frame begins," said Mr. Denison, of the phones' end-to-end display.

Bixby turns on and off with a physical button on the side of the phone, so people can easily discern whether the device is listening.

--Tripp Mickle contributed to this article.

Write to Timothy W. Martin at timothy.martin@wsj.com

(END) Dow Jones Newswires

March 30, 2017 02:47 ET (06:47 GMT)

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