Samsung's Note7 Debacle Is Bad, but Survivable: Analysts

By Todd R. Weiss  |  Posted 2016-10-11 Print this article Print
Samsung, Note7, Note7 recall, Note7 fires, Note7 replacement, CPSC, smartphone fires, battery fires, iPhone 7

NEWS ANALYSIS: Dumping the Note7 for good had to be done once battery fires were seen in the replacement Note7 smartphones, analysts said.

After new reports of battery fires and explosions began surfacing in replacement Samsung Galaxy Note7 smartphones around the world in recent weeks following global recall efforts for the original phone, it was only a matter of time before the Note7 flagship phone would be unceremoniously dropped from the company's product line. 

That's the consensus opinion from a group of mobile IT analysts who spoke with eWEEK on Oct. 11 about Samsung's not-so-surprising, but still-startling move to drop the innovative phone from its product lineup for good and offer customers other Samsung phones or full refunds to put the whole mess behind the company.

Samsung announced the end of its Note7 flagship smartphone model following more than 100 reports of battery fires and explosions around the world, including about five recent reports involving replacement Note7s that were supposedly free of the defects in the original models.

The quick demise of the handset, which was first sold in late August and subject to a recall in September, had to be done after the alleged fix ended up being no better than the original battery problem, Rob Enderle, principal analyst with Enderle Group, told eWEEK.

"They had no choice," said Enderle. "They were on a path where folks would start avoiding all Samsung products so they needed to do dramatic damage control [and] the product had to be discontinued. It may be the end of the Galaxy Note line altogether."

If the Note7 hadn't been dropped permanently and pulled off the market, there would have been "no way a consumer, or airline, would be able to tell which Galaxy Note was safe" for use, he added.

In addition, if Samsung had kept the Note7 on the market despite concerns about its batteries, "there was a good chance all Samsung phones would be banned [on planes as the Note7 had in recent weeks] and an increasing chance airlines might act more aggressively against all smartphones," said Enderle. "Samsung clearly didn't understand the cause of the problem when they started implementing fixes and, in the end, they did billions of dollars of avoidable damage to their brand."

Maribel Lopez, principal analyst at Lopez Research, told eWEEK that the end of the Note7 model makes sense because it was ultimately becoming "too difficult to get all the phones back and replaced."

That's too bad, she said, because "it was a great phone," she added.

The move was absolutely understandable because while the first attempt to recall and fix the phone was not a desired situation, it ultimately failed, leaving Samsung with no alternative, said Lopez. "Absolutely, no one gets a third chance at a phone," she added.

Another analyst, Tuong Nguyen of Gartner, said he thinks Samsung "could have tried another round [of replacement phones], but that would likely have caused even more confusion and frustration. Note7 owners would be left wondering if they can rely on the replacement of the replacement."

For Samsung, the troubled release of the Note7 is a "big and damaging one for a number of reasons," including that the handset is the company's flagship model and affects a valuable high-end segment of the market. Worse for Samsung is that the problems came "close to the end of the year—the biggest quarter for sales."

The Note7 Debacle Could Hurt Samsung's Relationship with Consumers

Jack Narcotta, a senior analyst with Technology Business Research, called the Note7 fiasco a "worst-case scenario for Samsung" that damages the company financially through lost sales of a premier device and unexpected costs for the recall, while also putting "a tremendous dent in its brand, which was on the rebound after the somewhat flat response to the Galaxy S5 and S6."


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