Samsung has decided to recall its Galaxy Note 7 units after it received several complain of the handset catching fire and exploding due to an issue with the phone’s battery.
This is a massive setback for Samsung as the Galaxy Note 7 is its flagship phablet. The South Korean tech giant will be recalling all 2.5 million Note 7 units and further sales of this product have been halted.
Several reports suggest that Samsung will be offering customers, who bought the Note 7, replacement handsets. The Galaxy Note 7 had received rave reviews from industry pundits and everyone was expecting the phablet to be a massive success. If Samsung succeeds in completing the recall process quickly and can offer the said replacements on time the company might be able to save face but one thing it has certainly lost is momentum.
Before reports of the phablet catching fire came out just about every media outlet had proclaimed that Samsung Galaxy Note 7 could be a potential blockbuster hit for Samsung. As it turns out this recall will not only hurt Samsung but will likely benefit its competitors too.
Apple’s iPhone 7 almost certainly stands to benefit from Samsung’s misery. It is no secret that the iPhone 7 has been the most widely anticipated and awaited product launch of the year and for its launch to coincide with Samsung’s recall of the Note 7 may serve as the icing on the cake for Apple. This is unfolding almost like the perfect movie script.
Apart from being the top two smartphone brands in the world, Apple and Samsung are also sworn enemies. The two companies have been at loggerheads for quite some time now. The legal wars between two have become the stuff of tech industry’s folklore. There is no better way to put this but Apple maybe winning this war at the moment thanks largely to Samsung’s self-inflicted wound.
Latest reports suggest that this total recall of Galaxy Note 7 units may cost Samsung to the tune of $1 billion. In the scheme of things this may seem like a speeding ticket for Samsung, which has been riding high on the success of its current flagship Galaxy S7, but the head of Samsung’s mobile division didn’t mince words when he called this recall “heartbreaking”.
Samsung has a projected net income of $20.6 billion this year and by that account $1 billion is still a fairly small percentage of loss incurred by the company. However, it is not the monetary loss that is hurting Samsung.
In the consumer electronics industry there are few things more important than brand perception among consumers and this untimely and unfortunate event may hurt brand Samsung in the long run. So it is not surprising to see Samsung moving quickly and voluntarily to recall all Note 7 units. The company does not want its best smartphone ever to be responsible for a diminished brand presence in some countries.
Another fallout of this event has been the unwanted media attention that it has brought Samsung SDI, the battery manufacturer for a majority of Samsung phones until recently. Emerging reports suggest that the newer units of Galaxy Note 7 will not come with batteries manufactured by Samsung SDI. Also, it is being speculated that Samsung SDI might have to bear some of the cost of this massive recall and replacement effort.
Interestingly, Samsung SDI is listed as one of the current suppliers for Apple Inc. but Apple has clarified that the iPhone does not use the battery cell type which was the cause of the problems on the Galaxy Note 7.
In another recent development Oculus has issued warnings to its customers asking them not to pair the Galaxy Note 7 with the GearVR until their Note 7 is replaced. While this is a timely warning from Oculus it may cast further shadows over brand Samsung. What could be worse than a phone catching fire? Yes, a phone catching fire while it’s literally in your face on a VR device.
If Samsung successfully completes its Note 7 recall and provides all the promised replacements with a quick turnaround time then it may be able to avoid any further embarrassments. Having said that if there is one consumer electronics brand in the world that could pull this off it would have to be Samsung.