Galaxy S8 sales kick off in Korea to much hype

Samsung Electronics’ much-awaited Galaxy S8 and S8+ smartphones hit store shelves in Korea on Friday.

After breaking the record of its predecessor S7 in preorders, expectations are high that the phone will continue its sales rally. Through Monday, more than a million Korean consumers had placed preorders on the device. Telecom operators distributed more than 260,000 preorders on Tuesday and 90,000 more on Wednesday, according to estimates by local analysts.

“About 30 to 50 percent of preorders lead to actual sales,” said Kim Joon-seop, an analyst at Eugene Investment & Securities. “This means about 300,000 to 500,000 phones will be sold just from preorders alone.”

Demand by local consumers for the 128-gigabyte model of the S8+, the large-screen variation of the S8, was so high that supplies could not keep pace with demand. Analysts said this was why there was a big drop in the number of subscriptions to mobile plans between Tuesday and Wednesday.

To make the most out of this momentum, Korea’s three big mobile carriers are pulling out all the stops.

SK Telecom is working with Samsung Card to provide discounts on the phone, which starts at 930,000 won ($830). The carrier will also return money to users that exchange the S8 later for an S9 when it is released, a scheme to encourage brand loyalty. KT and LG U+ have a similar incentive, returning as much as 50 percent to customers that upgrade their phones.

A new incentive being offered by KT in partnership with K bank, Korea’s sole internet-only bank in which KT is a stakeholder, is a maximum 720,000 won discount on the phone. The condition is that consumers must spend a certain amount of money each month through their K bank card.

The Galaxy S8’s debut has not been without bumps. Its touted voice recognition feature, Bixby, is not yet fully operational, and some consumers have complained about an apparent red tint on the display.

“In the case of Bixby, Samsung explained it’s capable of ‘machine learning,’ meaning its accuracy will increase as owners use the system more frequently,” said Kim of Eugene Investment & Securities.

Kim added that mobile carriers’ profit from the phone will depend on whether customers choose to take the lump-sum cash-back on the phone or a discount on their monthly phone bill, which would cost the telecom operators more money.

“Even if more people go with the monthly discount, though, their average revenue per user will go up,” he said, given the popularity of the S8.

BY CHOI HYUNG-JO [choi.hyungjo@joongang.co.kr]