Samsung’s ‘Note 7’ exploding phone fiasco

Disfunctioning phone may ruin the company’s capital and reputation


Photo credit: Briana Mcdaniel

How one wrong move might bring the world’s top technology manufacturer straight to the bottom.

The Samsung Galaxy Note 7 was set to be the year’s greatest smartphone. It received some of the best reviews of any device of 2016, beating the iPhone 7in many cases.

There was just one flaw with the Note 7’s: they exploded.

A mere three weeks after its launch, reports of fires and explosions led to Samsung pulling the device from the shelves and starting an exchange program.

Samsung acted quickly and sent out revised units that were supposed to be safe to use. Just a few days later, reports of revised Note 7’s exploding began to surface, with one catching fire on a Southwest flight.

After that, Samsung made the decision to completely discontinue and recall all of their Note 7 devices. The company is expected to lose $17 billion as a result.

I think the $17 billion in lost sales and profits is only the tip of the iceberg. Samsung is the largest mobile phone manufacturer in the world, selling over 81 million devices in the first three months of this year. A $17 billion hit, while it may sound extreme, is not that much to the company as a whole.

The real problem the company is facing is customer loyalty. A recent surveyfound that 40% of Samsung customers are unlikely to ever buy another Samsung device. This is a critical blow to the company, especially now, with Apple, Google and LG all releasing new flagship devices.

I have been a devoted Samsung customer for years, and I loved my Galaxy Note 7 for the three weeks I had it. After the recall, I decided that I don’t trust them enough to continue buying from them. I purchased a Google Pixel XLinstead.

Samsung doesn’t just make phones, though. They also manufacture computers, washers and dryers, dishwashers, microwaves, ovens, refrigerators, televisions and much more. In South Korea, Samsung owns hospitals and universities, and their presence can be seen in virtually every aspect of life there.

This can be good, or very bad for Samsung and South Korea. It’s good that they are invested in more than just the cell phone market, and this makes the financial burden of the Note 7 easier to carry. However, if their brand value continues to fall, their other industries could be affected. Samsung’s stock is down 8%, and that can have serious ramifications.

If their customer base takes the hit analysts are predicting, then sales of their upcoming Galaxy S8 smartphone could be very underwhelming. This could cause a ripple effect throughout the company, leading to further losses and a larger decrease in brand value. This could be detrimental to South Korea’s economy, since Samsung is their largest exporter.

Despite their best efforts, Samsung will have difficulty convincing people their phones are safe. This is not the first time a popular device has caught fire, but it is the first to do so on such a large scale. Over 112 Note 7’s have caught fire. That number may seem small out of the 2.5 million sold, but it is enough to lead to the dangerous situation Samsung got themselves into.

If consumer safety is really Samsung’s top priority, then they should have done more extensive testing to avoid releasing a dangerous handset into the market.

It is unacceptable for a company of Samsung’s caliber to put consumers at risk. Their actions will hurt themselves and their home country significantly. It will be difficult to bounce back from this, and other companies will undoubtedly capitalize off Samsung’s ‘explosive’ failure.

Carson Predovich can be reached at [email protected] or @cpredo120 on Twitter.