Samsung Galaxy Note 7 Recall: 5 Vital Facts

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It had seen a surge in the smartphone market, but Samsung’s progress literally went up in smoke in September 2016. Welcome to WatchMojo News, the weekly series from WatchMojo.com where we break down news stories that might be on your radar. In this instalment, we’re counting down 5 crucial facts you should know about the Samsung Galaxy Note 7 recall.



#5: Why Is the Galaxy Note 7 Significant?

The Product


The Galaxy Note series has been one of Samsung’s flagship models in the smartphone market ever since the South Korean company launched the first edition in 2011. The Galaxy Note 7 follows on from the Galaxy Note 5 – one of 2016’s most popular Android devices – and offers users the latest smartphone technology, including a 5.7 inch Super AMOLED curved display, Samsung’s signature S-Pen stylus, and iris recognition tech as well as a fingerprint reader. The phone was unveiled on August 2nd, 2016 and officially released on August 19th, around a month before Apple released the iPhone 7. Consumers and critics had expected a fresh instalment in the smartphone sales war between the two companies, and the Note 7 seemed to get off to a good start. Pre-order records were smashed in South Korea, and there were worldwide reports of higher than expected sales figures, meaning some countries were even forced to delay release of the product in order to meet demand.



#4: What’s the Problem with the Phones?

The Recall


The early success quickly turned sour when multiple reports were received of Galaxy Note 7s overheating – and sometimes exploding. Users took to social media to post photos of damaged devices, showing burnt, charred and melted phones. Concerns for user safety prompted Samsung to initially halt sales and eventually issue a worldwide recall in early September, with president of the company’s mobile business, Koh Dong-jin, citing ‘a battery cell problem’ as the issue. More specifically, Samsung cites a defect in the 4-volt lithium ion battery. Samsung SDI Co. supplied the majority of Note 7 batteries, but the affiliate company is widely expected to lose its chief supplier status accordingly. After initial confusion regarding which phones were affected, Samsung warned all Note 7 users to ‘stop using your device, power it down and immediately exchange it’. In a statement updated on September 15th, the company gave customers three options: They could exchange their faulty device for a new, approved Note 7 (accepting a short delay for processing); exchange the Note 7 for a Galaxy S7 or S7 edge and receive a refund of the price difference, or contact their point of purchase to obtain a full refund.



#3: How Will This Affect the Smartphone Market?

The Competition


Days after Samsung issued a full product recall, Apple officially released their iPhone 7. Until the reports of Note 7s bursting into flames, Samsung had looked set to mount a serious challenge against its long-standing rival, especially as Apple had received criticism of its own in the run-up to the iPhone launch. Supposed design flaws with iPhone 7 and a hurried security update for iOS 9.3.5 were soon dropped by the press in favor of Samsung’s safety issues, while initial clamor online over the removal of the iPhone headphone jack also cooled. Apple – who had experienced problems of their own with their last major smartphone launch and ‘bend-gate’ in 2014-15 – are sure to benefit from their chief competitor’s troubles, as analysts expect trust in Samsung to waver, at least temporarily.





#2: What Effect Will the Recall Have on Customers and the Company?

The Profits


While Samsung assured customers that recall procedures would be carried out as quickly as possible – the US exchange program promised a replacement Note 7 ‘no later than September 21st, 2016’ – the inconvenience was clear, and many felt that the $25 gift card given as compensation was not enough. Prior to September 16th, the Samsung Safety Recall was just a voluntary recall, one after which the US Federal Aviation Authority called on passengers to avoid using Galaxy Note 7 devices during a flight, and some public transport systems banned use of the phones on their services. But as of that day, the Consumer Product Safety Commission issued a formal government recall, citing the immediate risk posed by the devices and that they should not be used. The official recall recommended that the Note 7s be returned immediately, because, according to Elliot Kaye of the CPSC, “this product presents such a serious fire hazard.” Following this, the FAA is expected to ban the use of the device on commercial planes entirely. Developments such as these have unsurprisingly marred the Samsung brand, and were reflected by falls on the stock market during September 2016. Between launch and recall, over one million Note 7 devices were sold across 10 countries, and around 2.5 million potentially faulty phones are believed to have been manufactured. According to the International Business Times, Samsung’s market value took a hit of up to $22 billion as a result of the initial recall, while the highest predictions say problems with the Note 7 could cost up to $1 billion. Samsung itself has declined to put a monetary value on the recall, but Koh Dong-jin has referred to as ‘heart-achingly’ high costs.



#1: What Does This Mean for the Future of Samsung?

The Future


While the short term economic impact of the recall should be manageable for a firm as large and influential as Samsung, longer lasting damage to the company’s reputation could prove more difficult to fix. As more reports emerge of phones overheating, serious burns and even house and car fires being blamed on the Note 7, potential customers are bound to think twice before buying a Samsung product. Indeed, in the wake of the recall, increased, though largely unverified, reports of other Samsung models experiencing similar problems came to light. The whole affair could cause considerable doubt in a customer’s mind next time he or she shops for a smartphone – which obviously helps the likes of Apple. Pre-release, Samsung had explained its jump from Note 5 to Note 7 (skipping a ‘6’), by suggesting that different numbers for different smartphone models had caused customer confusion; now, in an unfortunate twist, every Samsung device is in danger of being grouped together once again, but this time tarred with the same fear that it will set on fire or explode. A major blow, it comes as customer confidence in Samsung was rising following a difficult spell in the smartphone market. It’s down to the electronics giant to put things right as soon as possible, and to regain the attention and trust of its customer for the future.
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