Samsung’s Note 7 Failure

By: Gursahib Singh Buttar

On 2^nd August, 2016 Samsung unveiled the Galaxy Note 7 at a New York media event, commencing sales from 19^th august in 10 markets. On 24^th august first report of a Note 7 explosion surfaces in South Korea leading to the fire fiasco which everyone knows by now. Samsung tried to rectify the exploding problem by replacing tested batteries, but all in vain as the “safe” replacements that they provided still showed the problem.

The firm announced that it will offer a credit of $100 for exchanging the Note 7 with any Samsung smartphone and also stopped the production and issued a global recall. Reports have surfaced that Samsung might kill the “NOTE” brand name altogether with the production, after a survey by the company reportedly found that over 50% of South Korean users have a negative view of “NOTE” brand.

 Apparently, Samsung’s smartphone shipment to India fall short of target by 4 million units in 2016, as hit by global recall and halt in production of its flagship Note 7 smartphone. While Samsung had unveiled the Galaxy Note 7 in July in India, it delayed selling of the handset in India after cases of battery exploding while charging were reported in various countries, but device was made available in September only.

This Note 7 debacle is going to hit Samsung’s revenue nearly by Rs.6500 crore, shrinking its market share by 4.2 percent and the impact will be spanning all across the other segments too. CyberMedia Research Principal Analyst for Telecoms Faisal Kawoosa said “The issue is faced with the flagship model of the year, that too around festive season and as a result, customers’ confidence is shaken”. He also added “A perception, right or wrong, gets built within the market that if the issue is with the high-end premium model, there could be issues in the other models too”.

The company disclosed on Friday a negative impact of approximately mid-3 trillion won ($3 billion) on operating profit through March 2017, on top of an already announced $2.3 billion cut for the preceding period, being a total of $5.3 Billion Profit Impact from Note 7 crisis. This is another capital loss after Samsung lost the patent case of $120 million to Apple, a week before.  

Samsung Electronics Co Ltd shares opened up 1 percent on Thursday, rebounding for the first time after three straight days of falls following its decision to permanently end sales of its fire-prone Galaxy Note 7 smartphones. Samsung is right now trying to quickly find the cause of the fires that led to it pulling its Galaxy Note 7 smartphones and get a new model to market, as shares in the company slipped to a one-month low.