SSNHZ Samsung Electronics Company Ltd (PK)

By Timothy W. Martin and Sarah E. Needleman 

SEOUL -- Samsung Electronics Co. delayed the rollout of its Galaxy Fold because of technical problems just days ahead of its planned launch, a blow to the hardware giant and its hopes for a product it billed as one of the smartphone market's biggest innovations in years.

The Galaxy Fold, the industry's first mainstream foldable-screen device, was slated to reach shelves in the U.S. on Friday, priced at nearly $2,000. But problems with phones being used by reviewers prompted Samsung to push off the debut, the company said Monday, adding that it plans to make public a new release date in the coming weeks.

For buyers who preordered a Galaxy Fold on the company's website, Samsung was more specific, telling them in an email to expect shipping information in "two weeks."

The delay in what was a carefully choreographed launch illustrates challenges even the foremost digital-device makers sometimes have in producing major advances as they attempt to add new functions and pack more features into less space.

Less than three years ago, Samsung had to recall its Galaxy Note 7 after faulty batteries caused some of the newly released smartphones to catch fire. The episode tarnished the South Korean company's brand and cost Samsung about $6.5 billion as it went about removing the product from shelves.

Apple Inc. in 2017 experienced unusual production glitches with the screens on its iPhone X -- the most-advanced phone it had released in years -- and ended up releasing the product more than a month later than it typically brings new iPhones to market. And Apple last month canceled its Air power wireless-charging mat because of cost and technical glitches, 18 months after announcing it with fanfare.

The smartphone business is dealing with a prolonged sales slump as consumers, largely unimpressed with new innovations, hold on to their devices for longer before upgrading. Samsung and Apple, long the dominant players in the industry, also have grappled with rising competition from Chinese manufacturers, especially Huawei Technologies Co., which plans its own foldable device.

Samsung, the world's largest phone maker, has pinned high hopes on the Galaxy Fold, seeing it as a way to distinguish the company as a product innovator. The device alters the rectangular design that smartphones have had for more than a decade, and Samsung has marketed it as defining a new category melding features of smartphones and tablets.

The handset, which folds in half like a book, boasts a tablet-size screen measuring 7.3 inches diagonally. When closed, it sports a second, smaller outer display that can perform most tasks.

The Wall Street Journal earlier Monday reported Samsung's plans to delay the Galaxy Fold release, with people familiar with the matter pointing to problems affecting the handset's hinge and its main screen. The company initially said it would stick to the Friday launch despite the issues raised by reviewers.

"Delays happen but this I put in a different category because it was such an important release," said Daniel Ives, a managing director at Wedbush Securities. "Samsung has an opportunity to gain share versus the likes of Apple. They just can't trip over their shoelaces getting there."

Still, the Galaxy Fold hadn't yet shipped to consumers and wasn't intended to be a mass-market product anyway, said IHS Markit analyst Gerrit Schneemann. He expects Samsung's competitors in high-end innovation to take extra caution now. "They're looking at it as a guide, a learning tool."

Samsung's statement said its initial inspection of the problems reported by reviewers suggested they could stem from impact on the exposed areas of the hinge at the top and bottom. In one case, "substances found inside the device affected the display performance," it said, without elaborating.

Multiple tech reviewers publicized problems with the Galaxy Fold last week, encountering issues after using it for a day or two.

Some reviewers had unknowingly ripped off part of the phone's display, believing it to be a protective cover. Others had problems with hinges or flickering screens. Multiple outlets reported they didn't have any issues with their Galaxy Fold handsets.

Samsung has said it would give consumers clear warning to not remove the display's top layer. It said Monday it will take measures to improve the phone's display protection.

Some prospective Galaxy Fold buyers said the screen issues and a delay wouldn't damp their appetite. "It's a little frustrating that I may have to wait another month or a few weeks," said Philip Gilmore, a 30-year-old entrepreneur in Somerset, Ky. "But I'm just too excited about this new technology."

The launch delay came hours after the South Korean technology giant abruptly scrapped prerelease media events planned for Hong Kong on Tuesday and Shanghai on Wednesday. The company at the time didn't specify why the two media briefings had been aborted.

The foldable-screen phone from China's Huawei, called the Mate X, will feature a bigger screen than the Galaxy Fold and a steeper price, selling for about $2,600. It is expected to be released this fall, meaning Samsung could still have several months of lead time once it sorts out problems with the Galaxy Fold.

Samsung needs a sales lift after reporting an 8% decline in smartphone shipments in 2018, a bigger drop than the industry's 5% slide, according to Strategy Analytics, a market researcher.

Botched product launches extend to other corners of technology and often end up quickly forgotten, said NPD analyst Stephen Baker. He expects Samsung's stumble to become ancient history as long as the company solves the problems with the Galaxy Fold, especially since the product never reached consumers' hands.

"The category has felt a little bit tired as far as innovation so it was exciting for people to have something to talk about," said Carolina Milanesi, an analyst at market-research firm Creative Strategies Inc. "As long as we get a new release date soon, I don't think it will be a big problem."

Write to Timothy W. Martin at timothy.martin@wsj.com and Sarah E. Needleman at sarah.needleman@wsj.com

(END) Dow Jones Newswires

April 22, 2019 19:21 ET (23:21 GMT)

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