With Galaxy S8 Smartphone, Samsung Looks to Hang Up on Note 7 Recall

By Eun-Young Jeong and Jonathan Cheng 

SEOUL-- Samsung Electronics Co. is hoping that a streamlined design and a new virtual assistant for its next flagship smartphone will help consumers forget last year's massive Galaxy Note 7 recall.

The South Korean technology giant is working on a phone that will likely strip away the physical home button from the front of its coming Galaxy S8 smartphone and showcase a new virtual assistant akin to Apple Inc.'s Siri--to be called Bixby--according to people familiar with the matter.

The fingerprint scanner that unlocks the Galaxy S8 will be moved from the home button to a new location on the back of the device, these people said, warning that features could still change with about two months before the phone is available to consumers.

In a break from the past, Samsung will only release a curved-screen version of the new phone, though it will be available in two different sizes, one of these people said. Unlike Apple's latest iPhone, Samsung's new handset will have an earphone jack, this person added.

One of the people familiar with the matter said the new phone is set to be unveiled at an event in New York late next month. It will be Samsung's most closely watched product launch in years.

Samsung hopes the new features will convince consumers the S8 is worth buying, given lingering concerns about the safety of its smartphones. Last month, Samsung said its investigation concluded that battery suppliers were to blame for its Galaxy Note 7 phones catching fire.

In fact, the S8 might use batteries from Samsung SDI Co., the battery-making affiliate that was one of two suppliers blamed by the smartphone maker for the recall.

Cha Nam-hyun, Samsung SDI's vice president of marketing, told analysts last month that the company signed up to supply batteries for the S8, which would help Samsung SDI's sales in the first three months of 2017.

Since the Galaxy Note 7 recall, Samsung SDI says it has spent 150 billion Korean won ($130 million) to strengthen product safety, while launching an X-ray inspection process for all of its batteries, a change from its previous method of conducting sample inspections.

Samsung Electronics declined to comment on the features of the phone and on its battery suppliers.

After the Galaxy Note 7 recall, which was triggered by reports of some devices overheating, the company said the ordeal cost it about $5 billion in losses and lost sales. Samsung then lost its No. 1 position in the global smartphone market to Apple in the last three months of 2016, marking the first quarter in two years in which Samsung wasn't the leader in shipments, according to data from Counterpoint Technology Market Research.

In the Asia-Pacific region in particular, the Samsung fell to fifth place from first in the preceding quarter, falling behind Apple and Huawei Technologies Co. as well as China's BBK Electronics Co., which owns the Oppo and Vivo brands.

Samsung is hoping that strong sales of the Galaxy S8 can turn the company's fortunes around.

The Galaxy S8's new artificial intelligence-powered assistant, Bixby, is capable of answering voiced questions from users. The Wall Street Journal reported in November that Samsung was devoting a new physical button on the side of the device to allow users to quickly use the service. The company is still planning on adding the artificial-intelligence button, the people familiar with the matter said.

Samsung has been looking to beef up its capabilities in AI, a hot new area of interest for Samsung and its rivals. In October, Samsung bought U.S. startupViv Labs Inc., which was started in part by Siri co-creators Dag Kittlaus and Adam Cheyer.

In recent weeks, Samsung has also posted more AI-related openings on its internal jobs platform to recruit employees from the company's other business divisions, according to a person familiar with the matter.

Injong Rhee, chief technology officer at Samsung's mobile division, said in November that the Galaxy S8's AI service would feature technology from Viv Labs by offering services that are "significantly differentiated" from those sold by the competition.

But one of the people familiar with the matter say that Bixby will rely on an upgraded version of Samsung's homegrown virtual assistant service, dubbed S Voice, rather than on Viv Labs technology.

Samsung first introduced S Voice in 2012 with its Galaxy S3 smartphone. It received lukewarm reviews. Company engineers in recent months have been busy upgrading S Voice for a relaunch on the Galaxy S8, this person said.

Write to Eun-Young Jeong at [e-mail] and Jonathan Cheng at [e-mail]

(END) Dow Jones Newswires

February 10, 2017 00:20 ET (05:20 GMT)

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