Samsung's Note7 Debacle Is Bad, but Survivable: Analysts - Page 2

For Samsung, the end of the Note7 likely came because while its problems on paper appeared resolvable, ultimately no solution was readily available, he said. "At its most basic level it was a hardware component problem, and as we know Samsung is, in addition to being a mobile device company, a hardware component manufacturer. The earlier missteps or corners that Samsung perhaps cut were a bit out of character for this type of recall, but it appeared that Samsung was making the right moves."

The biggest potential problem for Samsung now is how consumers will see the brand in the aftermath of the Note7's death, said Narcotta, while enterprise users are less likely to worry about the situation long term.

"Consumers, however, will hit the brakes," said Narcotta. "If you listen, you're likely already hearing what Samsung is fearing most: the consumers are saying 'Samsung's phones explode.' Remember that the device in question isn't the Galaxy S7. It's the Note7. But consumers are already talking about it as a problem across all of Samsung's devices. That’s potentially catastrophic for Samsung."

Another analyst, Avi Greengart of Current Analysis, said he was pleased that Samsung made the call to drop the Note7 when it did.

"It's a relief that the product is being pulled before it became a real tragedy with someone's death," said Greengart. "It is also good that Samsung is ending this recall madness and stopping further erosion of its brand."

The end of the phone became likely, said Greengart, when major mobile carriers including AT&T, T-Mobile and Verizon announced recently that they were stopping sales and distribution of the handsets due to concerns about fires. "Once Samsung's carrier partners took matters into their own hands and stopped distributing supposedly fixed Note 7's there was nothing Samsung could do," he said.

Apple Could Benefit from the Note7's Demise

The Samsung competitor that could most benefit due to the collapse of the Note7 is Apple, said Greengart. "Apple is going to be a big beneficiary just because Apple and Samsung are the main players in the premium segment of the market. I expect only a minority of Note 7 users to move to iOS, but the Apple ecosystem is incredibly sticky, so those who do leave likely are not coming back."

At the same time, the failure of the Note7 in the marketplace could also benefit Google's latest Pixel and Pixel XL premium smartphones, while also boosting sales for LG, HTC, and Lenovo, said Greengart.

Overall, the problem with the fire-prone Note7 was likely "a fundamental design flaw, not a problem with the battery supplier," said Greengart. "Or that Samsung botched the recall and didn't actually fix some of the replacement units. We still don't know what the problem is, which means that Samsung doesn't know either, or isn't saying."

Whatever did happen, though, Samsung's "communication has been terribly opaque," he complained.

Another analyst, David McQueen of ABI Research, told eWEEK that the plug had to be pulled on the phone model at this time because there was no way for the company to know how many more phones would catch fire and fail if it remained on the market.

"The rug got pulled out from under them with the problems of the Note7," said McQueen. "It's very unfortunate for them" because it was a unique phone due to its stylus, its 2K display, retina scanning capabilities and other innovative features, he said. "It had a whole host of things which were probably going to be leaders in the marketplace. None of them appear on the iPhone7."

Roger Kay, an analyst with Endpoint Technologies Associates, called the Note7 situation "a pretty big debacle" for the company.

"The fact that they withdrew it entirely is kind of the company owning up that it was designed badly," said Kay. "It exceeded its heat envelope. They tried to have a certain form factor of smallness and performance, and they tried to fuel all that with a battery with long-enough life."

Ultimately, that strategy failed big time when Samsung engineers tried to squeeze its battery into too small of a space, which led to heating and fire problems, said Kay. "It couldn't be done without a complete redesigning of the phone. They essentially pushed the technology a little too far."

What Samsung should have done, he said, is tested the new phone more tenaciously so the problem would have surfaced long before any of the devices were ever sent to manufacturing or sold, said Kay.

"They should have caught this in tests," he said. "I wouldn't be surprised if someone in engineering saw it and raised a finger but superiors might have said 'we don't want to hear about it,'" said Kay. "That's a pretty likely scenario, but it's just speculation."