When it comes to innovative and highly functional smartphones, Samsung needs no introduction. The Korean smartphone giant has been dominating the mobile phone market for over ten years now. Having launched a series of widely popular smartphones at most price segments, Samsung has become a household name. However, no matter how good they are, even the best can fumble, and so did Samsung. The recent debacle involving their Galaxy Note 7 lineup of smartphones has given a severe jolt to the company.
So the question is: How Will Samsung Recover From The Exploding Galaxy Note 7? Critics from around the world are predicting a dwindling future for Samsung, but that is a farfetched conclusion for now. Still, many are considering it a wake-up call for Samsung. As such, there is a lot that has been pushed under the carpet that needs to be explored. However, the company has seen many such episodes in its life, and things may well get back on track considering how they’ve dealt with similar events in the past.
When Things Were Great
To know more about how the actual impact of Samsung’s Note 7 battery-gate and its implications for the company, a look at the history is imminent. Samsung planned the Galaxy Note lineup of phones in early 2011s. Since then, there is no turning back. The Galaxy Note lineup offered the most bleeding edge features in any smartphone in the industry. So much, so that other competitors often struggled to compete with its performance. In a short span, the Galaxy took over as the premier offering by the company and got listed above the flagship Galaxy S series.
Though the latter is still the flagship model, it was the Note series that took the burden of launching innovative and novel solutions in the market. With the introduction of each version, the Galaxy Note phones were sold in record numbers. The situation continued until the launch of Galaxy Note 7. Though the phone was breaking all records as the most sold smartphone by Samsung, its battery had shown weak performance. There have been several cases reported of Note 7 battery exploding while charging.
Galaxy Note 7 Battery Gate
Such stumbles don’t occur overnight so the need to investigate the issue must be taken seriously. However, as things stand thus far, Samsung is in no mood to take a deep dive into what happened and how their most popular smartphone lineup to date ended up into flames. Unless the crux of the problem is addressed, Samsung will keep floating in dwindling waters.
On paper, the Galaxy Note 7 was supposedly the best smartphone Samsung had ever developed. In fact, the phone everything that Samsung envisaged necessary to maintain their lead in the market. With a 5.7-inch Quad HD display, Exynos 8890 CPU, 5-megapixel front shooter and a 12-megapixel rear camera, fingerprint scanner, stylus S Pen support, Gorilla Glass 5 screen protection among others. In short, the phone was meant to take the company a notch above the rest regarding functionality and price. However, the phone had one drawback that led to its downfall. The battery had shown some issues while using the quick charge feature.
Upon release, the phone found a huge market for itself and was selling like hotcakes. Within three months, the Note 7 had already become the highest selling phone in its segment. However, as more reports of phone bursting while charging, the company already had its hands full of such reports. Soon after, Samsung had launched plans to recall problematic phones and replace them with new ones. To the dismay of company and many users, the handsets replacing the old ones also proved to be suffering from the same problem.
Within two months, the company had received hundreds of reports of phone burst and had to take evasive actions to overcome the damage, but the damage had gone beyond control. This time, Samsung was receiving severe criticism from almost all markets around the world. As reports of more bursting phones kept flooding in, the company was eventually forced to recall every Note 7 in the market. In the same vein, the company also announced the intention of discontinuing the Note 7 altogether.
According to Forbes, the problem lies not in the battery itself, but the chipset. For some reason, the Exynos chipset failed to address the battery overheating issue. When users plugged the phone into the charger, the chipset couldn’t manage the inflow of current even when the phone was completely charged. This led to the battery to heat up that caused the phone to explode.
Losses And Recalls
Samsung tried their best to reciprocate the initial reports bursting phones and immediately shipped new phones. However, the company suffered an even greater blow when the replaced phones also suffered the same fate. In an unprecedented event, reports began to surface that many returned phones also reportedly caught fire. The news sent shockwaves to the company and called for an immediate solution. A contingency measure, Samsung halted all shipments of Galaxy Note 7 smartphones in all regions.
The whole episode was a mess, and the company had to suffer $billions in sales each month. However, things didn’t just stop many customers suffered injuries or loss of property due to bursting phones. As such, a spree of lawsuits and complaints were launched against Samsung, most of which originated from The Americas, Europe, and Asia. Most of these users were users on monthly payment plans and had to pay for their smartphone each month. In the aftermath of Note 7 battery gate, cellular companies are now issuing a warning to consumers not to buy or seek combustible devices. After losing almost $2 billion in direct losses, followed by recalls and replacements, the company eventually expects to lose approximately $8 billion by the end of the year. This doesn’t include compensation that the corporation is paying customers to stay faithful to the brand.
There is little doubt that Samsung now has to work on improving their market position. The company is taking all measures it could to save its reputation as the number one smartphone maker in the world. The news of replacement phones bursting caused more damage to the reputation of Korean smartphone giant. The fallout of this resulted in company shares slumping up to 10% in just two days. Compared to this, the news of company halting the production came a bit too late. As of now, there is little to talk about Samsung’s shares in the Korean stock market and signs of recovery are nowhere to be seen.
The Federal Aviation Authority Announcement
Despite By October 2016, Samsung had already sold up to 3 million Note 7 handsets. With so many handsets being sold, the story of Note 7 is still unfolding. With so many events and coverage of the handset blowing and catching fire, it will leave some lasting impact. As such, the more controversies surrounding the handset, the more worrying it will become for Samsung. The irony is that this the opposite to the coverage that Samsung would be looking for otherwise.
However, just when things began to cool down a little, another story developed. Only this time, it had deeper implications that just a few handsets are blowing up and causing damage. In the aftermath of Note 7 debacle, the FAA announced that passengers are having Galaxy Note 7 were prohibited from using phones while in flight. This led Airlines to make necessary arrangements and restricting users of Note 7 not to use phones before the flight departed. The announcement contributed in damaging the already jolted reputation of Samsung.
If that’s not enough, Samsung creating another hurdle by messing up the recall in the U.S. The company has felt pressure from certain corners in the country, but this one was different. From the messed up launch to the hurried, recall, Samsung fumbled time and again during the recall process. Authorities at Samsung failed to inform the Consumer Product Safety Commission (CPSC) before issuing the recall and had to pay for this dearly. The process of recall includes the company that intends to recall a product to inform the CPSC within the 24 hours when the risk is identified. Samsung missed the deadline by a considerable margin but have posted the recall soon after.
The Current Situation
In the aftermath of back to back bad news, the company is now working on a two prong strategy to save the existing fan following and customer base as well as improve the quality of next flagship smartphone, the Galaxy 8. However, there are no plans as to whether or not the company intends to launch another Galaxy Note series phone along with their S series flagship. Samsung plans to improve profits and customer base for their upcoming smartphones.
Samsung has to address many challenges lying ahead simultaneously. In the face of increasingly stiff competition from its domestic rival LG and foreign companies like Huawei, Lenovo, and its subsidiary Motorola, the company has its work cut short on many fronts. Piling up the situation, the damage that Note 7 debacle has caused Samsung is going to cause its executives huge headaches in months to come. Even more disturbing is the fact that the Note series was the premier offering by the company. After the Note 7 episode, many customers would be wary of buying a high-end smartphone from Samsung.
However, Samsung’s nightmare is far from over, especially in the US and Chinese markets. The two regions are stuffed with their respective local brands and have proved to be great hunting grounds for different smartphone manufacturers. The iPhone 7, Apple’s latest flagship, is enjoying a successful streak that will remain so for the next few months at the least. The holiday season is only going to bring them more sales. Same is the case with LG and other brands. Worse, Google has now joined the long line of companies benefiting from the failure of Samsung. They just launched the Pixel and Pixel XL series, and both sets are receiving positive reviews in the market.
While companies would be enjoying rampant sales, Samsung would be mending the damage they’ve sustained due to Note 7 debacle. However, there is plenty of hope left for Samsung. If Samsung ever needed a heads up, it would be now.
There is not much to look towards to for a company like Samsung after suffering from an $8 billion blow. Still, they have something positive to look towards to. What could it be? Well, the tremendous success of Galaxy S7 is a clear hint that days of Samsung are far from over. Not only the Galaxy s7 remained the bestselling brand in Korea, it proved its valor in smartphone markets the world over. As such, the phone is still the number one selling brand in Korea and is selling well in Asia and Europe.
Another thing that might favor Samsung is that this is the first major recall of any of their smartphone. We’ve seen many such examples in the industry where even bigger recalls took place. The good thing is that none of these industry giants ran out of business despite recalls. Samsung is too big a company to go out of business just because of one setback. Unlike Nokia, Samsung has a history of making timely decisions and changes that have been proven worthy of time. Yes, the company has suffered a major setback and is suffering because of it dearly, and may do so for a while to come. The reemergence of Samsung Galaxy S7 and S7 Edge is an equal sign that the company still has a lot of life left. Just when things couldn’t get worse, the sale of these two models is somehow soaring although both of sets have been on the market for many months. In fact, due to increased sales of both these models, the company is somehow reemerging as a major player that is focused on a brighter future.
By the end of the year, the company may have lost close to $9.5 billion in sales and more in customers. While others would be rejuvenating their flagships, Samsung would still be recovering from the Note 7 debacle. But, the company may well be back on track within two years at best. For now, Samsung is looking towards controlling the damage it suffered from bursting Note 7s. Though it will take some time for the company to overcome these losses, they are equally focused on the next installation of their flagship model, the Galaxy S8. Early rumors state that the flagship will cement Samsung’s reputation as a major player in the smartphone market. The company has devoted the R&D division with all the finances and tools and is looking forward to a grand come back. They’ll have to churn out something special off the manufacturing line to grab the lost market share and popularity though.