What a nightmare! Last month, Samsung’s Note 7 phones started exploding, leading to an unprecedented global recall that cost the company billions of dollar and a dent in the brand image that will take years to repair. But Samsung reacted swiftly by replacing the culprit – the battery from a particular supplier – and shipping “safe” Note 7s that came with a black square on the box and a green battery icon. Kudos!
And it would have been worthy of a pat on the back – pulling off a global recall of 2.5 million phones is no mean feat, after all – except for one problem.
Yes, the “safe” Note 7s have also started catching fire. There have been multiple reports, including the scary one of a replaced Note 7 catching fire inside an airplane, forcing all passengers to be evacuated. Elsewhere in the US, a Note 7 started smoking in a bedroom, sending its owner to the hospital. One more melted, burning a girl’s hand, while in Taiwan another exploded inside a woman’s pocket. Two more caught fire in South Korea. And you can count on it that over the next few days, you will see more report trickle in, some real, some fake.
At a time like this, you would not want to be in Samsung’s shoes. CNN Money reports that two major carriers in the USA – AT&T and T-Mobile – have announced they will stop offering replacement Note 7s pending further investigations. Samsung’s stock promptly took a dive, dropping 4.6 per cent in Seoul on Monday. Meanwhile, The Wall Street Journal brings news that Samsung has temporarily halted production of the Note 7.
So where does Samsung go from here? The company has promised to “move quickly” to investigate these cases and share findings as soon as possible. But it might be too late for the beleaguered Note 7. If these reports turn out to be true — which they most likely are – Samsung will be forced into a second recall. This means all new Note 7 replaced or sold – from the US to the UAE – will need to be rounded up yet again. Deja vu!
More importantly, will consumers trust Samsung enough to buy the replacement of the replacement of the Note 7? Especially when there are so many worthy alternatives such as the iPhone 7, LG V20 and Google Pixel? And what if the problem turns out to be with the phone itself? That might mean the charging circuitry – or more likely the entire motherboard – will have to be replaced. This will take much longer – and cost a lot more for Samsung – than simply popping open the back, replacing the battery and shipping back the phones.
This brings us to more dramatic alternatives: scrap the Note 7 entirely, refund buyers or offer the highly-rated S7 Edge as an alternative. This decision, of course, would have huge ramifications on the company’s bottom line and share price. But it might also be the cleaner way out of the Note 7 mess. Perhaps millions of Note 7s will end up in a landfill or be salvaged for parts. Those parts might even end up in the Note 8. We have already heard rumours that the company might prepone the launch of its other flagship phone – the S8 – by a month or two to divert attention away from the Note 7 fiasco. So it is likely they might do the same with the Note 8.
Though this would also mean the company will have to rush through the design, manufacturing and QC processes, which is precisely what got them in this mess! According to Bloomberg, the problems with the Note 7 can be traced back to Samsung’s overwhelming desire to beat Apple by launching the phone earlier than its arch nemesis, the iPhone 7. However, on the flip side, we can expect a smarter – but poorer – Samsung to not repeat the same mistakes again. One nightmare should be enough to last a few years, at least.