Why Apple may not be benefitting from Samsung’s Galaxy Note7 woes

As Samsung continues reeling over the fallout from its exploding Galaxy Note7, conventional wisdom is that this is a golden opportunity for rival Apple.

With Apple rolling out the new iPhone 7 and iPhone 7 Plus last month — following a year of declining sales — the absence of the Note7 in the marketplace and the negative impact of recent events on Samsung’s brand and reputation should be opportune.

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But it turns out Apple itself is not really in a position to take advantage of its rival’s problems. In Apple’s earnings call yesterday, executives explained that supply for the two new phones remains heavily constrained. That is, the company can’t make enough devices to meet demand.

With Apple forecasting a slight year-over-year increase in sales for the current quarter, analysts have been trying to understand exactly what would drive that growth. And so several of them asked about the impact of the Note7 debacle.

In response, Apple CFO Luca Maestri said while Apple feels good about the results of its new phones, it is still limited by the number of devices it can make, and it will be for some time.

“Maybe the most important element of this is the fact that we are supply-constrained on 7 and 7 Plus,” Maestri said.

And so when you talk about other competitors, it’s not particularly relevant to us right now because we are selling everything that we can produce. And so when we look at all these things in its totality, we think that for the total company, of course, we believe that revenue’s going to grow. You know that we don’t get into specific product from a unit standpoint giving guidance, and so we feel very confident about the trajectory for the company and for iPhone going forward.

Though it’s a small silver lining for Samsung, Apple’s inability to meet demand could give its beleaguered rival a few more weeks, and possibly a couple of months, to try to recover. That said, Samsung is still looking at a sharp drop in sales and serious financial impact from the Note7 disaster.