Why Samsung’s Galaxy S8 Is Seeing Deep Discounts

Sales of Samsung Electronics‘ (OTC:SSNLF) flagship Galaxy S8 handset could be off to a relatively slow start, amid reports of lackluster market share gains in the U.S. and the availability of attractive discounts and promotions early in the product life-cycle (the device was launched in mid-April). The success of the S8 was viewed as crucial for Samsung’s mobile unit, as it looked to restore its reputation following the Note 7 fire crisis, while taking on Apple’s upcoming 10th anniversary iPhone, which is expected to feature a radical redesign. While we’ll have to wait for Samsung’s Q2 earnings for more concrete data, it’s worth looking at some of the reports and trends to gauge the device’s performance so far.

We have a $1812 price estimate for Samsung Electronics, which is slightly below the current market price.

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A report from Kantar Worldpanel ComTech estimates that for the three month period ending in May 2017, Apple’s iPhones 7 and 7 Plus models held 20.1% market share in the U.S., while the Galaxy S8 and S8 Plus held just about an 8% market share.  While this could partly be due to the fact that the S8 was launched only towards the end of April, sales of the device still come in below the firm’s older S7 and S7 Edge models, which held about 8.8% share during the same period.

There has also been a lot of promotional activity surrounding the S8, despite the fact that the device was launched just two months ago. For instance, Samsung is offering a buy-one-get-one-free offer for T-Mobile users. While it’s possible that T-Mobile could be footing a part of the bill, Samsung is offering attractive promotions on unlocked devices as well ($300+ off the launch price with trade-ins of most working iOS or Android devices). This could indicate that Samsung is having issues after pricing the device at a premium to the market. The S8 launched at about $725 unlocked, while the S8 Plus was priced at around $825. The iPhone 7 starts at $650. Moreover, Samsung could be trying to capitalize on the window of opportunity to maximize sales prior to the fall launch of Apple’s much awaited 10th anniversary iPhone and the potential refresh of Google’s well-received Pixel smartphones. That said, promotions of this magnitude may not bode well for Samsung’s telecom unit for the quarter.

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