The debacle facing Samsung for its faulty Galaxy Note7, which the company recently announced it is no longer selling, reflects various issues in the smartphone industry’s manic race to rush out products on a yearly cycle.
After over a dozen reports that Note7 devices were smoking, catching fire, or exploding, the company issued a recall and replacement program. But when a few of the replacement units continued to combust in people’s homes, airplanes, or just by laying on desks, Samsung decided to stop all sales and effectively kill off the Note7. Samsung’s shares fell eight percent soon after the announcement, wiping US$19 billion as its stock’s value plummeted.
This is the smartphone equivalent of the Takata faulty airbag recall affecting the automotive industry, a global and widely covered fiasco that could affect Samsung’s reputation for years to come.
For a company that’s spent millions on getting their devices in high profile events like the 2016 Olympics as well as various award shows, the stigma of the Note7 recall (now a part of every airline’s pre-boarding spiel), casts a pall over all Galaxy devices and, by extension, over all smartphones as well.
Note was Samsung’s true flagship product
Samsung will reportedly “dispose” of these 2.5 million smartphones once they are all returned, which poses an alarming environmental problem that could very well have repercussions for years. Aside from containing the volatile batteries, chemicals, poisonous minerals, and environmental waste, these units aren’t 100 percent recyclable and will leave a lasting impact on the environment no matter how they are disposed.
This is really a shame. Samsung’s Note line of devices are really the company’s best showcase. The Galaxy Notes of the past created the larger smartphone market, made phablets acceptable, and pushed the industry towards larger screen sizes. The Note also brought back the stylus from PDA’s (Personal Digital Assistants) from a decade earlier and made them relevant input devices. These later found themselves on Microsoft Surface devices as well as on Apple’s iPad Pro.
The last Samsung product I purchased was the Galaxy Note 4, and this was a capable and still is one of the best smartphones I’ve used.
The Note line was a bestseller that succeeded where some of the smaller Galaxy devices failed. Quickly adopted by business users for their larger size, productivity-focused software and hardware features, and more premium build, I looked forward to each succeeding version of the Galaxy Note to dictate the technology and design of Samsung’s entire line of devices. Although, at times, it seemed like Samsung was rushing these off the production line to subvert timing of competing products being released. Now, the most prudent recourse for Samsung is to bury the Note brand and all the negativity it implies.
Chasing Apple, the jump from Note5 to Note7
Note issues aren’t anything new. The Note5, which was the Note7’s predecessor, had an S Pen stylus issue which would render some features unusable when the stylus was inserted the wrong way in. This was never an issue with previous Note devices and may have exposed a weakness in Samsung’s QA and testing process.
The issue with the Note7 remains unclear. The company initially blamed a small batch of batteries (made by subsidiary Samsung SDI) were the root cause which still required a massive recall of the 2.5 million devices sold globally. The bigger problem surfaced recently when it was the replacement units that started to catch fire, some in very public and dangerous situations. The Note7 was spiraling out of control and Samsung had no answers.
Samsung sent fireproof boxes complete with latex gloves to some customers to send back their Note7. It seems that these won’t even be allowed on cargo airplanes and will likely be brought by ground back to Samsung as they figure out what the hell happened. The Note7 is cursed, no one seems to want to get near it.
Damage to Samsung’s brand
The damage to Samsung’s brand in the smartphone space is substantial and could not come at a worse time for the company as rivals Apple and Google are shipping competing products that cost the same as the Note7 and offer the same large screen form factor.
Mark Johnson, an associate professor of Operations Management at Warwick Business School, is, researches product recalls and says that the way Samsung went about this recall made the situation worse.
“This has been a case study in how not to do a recall,” he says. “In research that I have conducted with Marko Bastl, of Marquette University, and Mike Bernon, of Cranfield School of Management, we found that firms that have a proactive recall strategy tend to see their share price not hit as badly by investors running scared from the potential costs of the recall.”
According to Johnson, “Samsung tried to rush the Note7 to market to beat the iPhone 7. Phones are complex things and the launch of new products is fraught with difficulties and delays. Samsung potentially rushed a number of critical stages, probably testing, in order to get to market quickly.” This is further supported by Samsung going from Note5 to Note7 in anticipation of Apple’s naming of their latest iPhone devices.
Not as agile as competitors
“The recall also indicated that Samsung is not as agile as some of its competitors and process-rigidity can mean a loss of flexibility. The process of the recall also indicates that Samsung has very little traceability or integration through the end-to-end supply chain. It was asking customers to identify affected phones in the first round of recalls by examining the color of the battery signal on the screen. In the 21st century, many companies can trace where items are through linking information processes with distributors and vendors,” Johnson says.
For the Note line of smartphones, this widespread and unprecedented recall could spell the end for that particular brand which is now tainted for potentially being a dangerous fire hazard.
Samsung still has the opportunity to win back customers by handling the refunds and returns without further hassle. It then has the unenviable task of having to win back goodwill of customers, partners, and carriers by focusing on products that are just as safe, if not more so, than what its competitors currently have.
This post first appeared on Canadian Reviewer.