Samsung leads the world in smartphone sales, with a healthy margin over second place Apple Inc. (NASDAQ:AAPL). However, there was a notable reversal in positions in recent months, when Samsung was battered by the PR nightmare of exploding Galaxy Note 7 batteries, letting Apple surge ahead for the lead. Now storm clouds are brewing for Samsung, with news that some Galaxy S9 smartphones are randomly texting photos. If this develops into another full-blown scandal, the timing couldn’t be better for Apple — and AAPL stock — with the 2018 iPhones set to be unveiled in just two months.
And the timing couldn’t be worse for Samsung, which is set to take the wraps off its new Galaxy Note 10 flagship on August 9.
Reports of Galaxy S9 Smartphones Randomly Texting Photos
Gizmodo was the first to report on an issue that was beginning to hit Reddit and Samsung user forums. Samsung Galaxy owners were reporting that their smartphones were randomly texting photos from the device camera roll to people on their contact list. And there is no record of the smartphone having done so. Given the nature of the photos that might be on those smartphones, there is significant potential for embarrassment.
Based on the complaints, it appears that the Galaxy S9 and Galaxy S9+ have been most affected –although people won’t know their smartphone is doing this unless the contact tells them they received photos…
This has all the makings of a PR disaster brewing for Samsung. And the last time its smartphones were making headlines for the wrong reasons — the exploding Galaxy Note 7 — Apple was able to take advantage and grab the smartphone sales lead. Consumers who are suddenly wary of the Galaxy S9, but still want a flagship smartphone, are good news for iPhone sales and for AAPL stock.
What’s Going On?
We’re still early into the situation, but its Samsung’s own default Samsung Messages app that’s been sending the photos. And the timing of the reports raises some suspicions. Carriers including T-Mobile (NASDAQ:TMUS) recently began rolling out an update to a new text messaging standard called RCS. There is speculation that the RCS update and Samsung Messages are interacting somehow to cause the issue.
T-Mobile told The Verge to “check in with Samsung on this, it’s not a T-Mobile issue.”
Meanwhile, Samsung released a statement to Gizmodo:
“We are aware of the reports regarding this matter and our technical teams are looking into it. Concerned customers are encouraged to contact us directly at 1-800-SAMSUNG.”
There is a technical fix that Galaxy S9 and other Samsung smartphone owners can use to prevent the possibility of an embarrassing random photo dump. They can change their settings to deny Samsung Messages from having access to storage — which means they also can’t text a photo intentionally. Or, they could get rid of it and switch to another messaging app altogether, which means switching to a new app they’re less comfortable with. And Samsung would prefer users stay on its own products.
Potential Impact? There Could be an Upside for AAPL Stock….
At the moment, the random photo texting issue is a concern for Samsung. The company is investigating and may be able to get a fix in place before things get any worse. But what happens if someone has a sensitive private photo that ends up being texted to the wrong person? A high profile incident like that could quickly escalate this into another PR nightmare for the company.
As we’ve seen from the previous Samsung scandal, the main beneficiary of that happening would be AAPL. Consumers wary of Samsung smartphones will almost certainly translate into more iPhone sales for Apple. And with this issue smoldering just two months from the expected launch date for new Apple iPhones, when the temptation for Android switchers is at its yearly peak? The timing couldn’t be worse for Samsung, or better for AAPL stock.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
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