The year 2016 was the best year for Samsung. The year while their product lineup matured to such an extent that most of the Media Publications had already decided to award the Galaxy S7 & the S7 Edge the Best Smartphone Award with the wait only being for the new iPhone’s that were recently launched. The Brand has been making amazing sales that have been growing YOY. In fact, post the Galaxy S6 launch in 2015 the brand had tasted great success with the Note 5 & it became unstoppable that suddenly got severely hit in the last two months after the brand’s Galaxy Note 7 launch.
Technically Samsung was expected to launch the Note 6 as a successor to last years model, but they went ahead & skipped the product to ensure that the consumers do not get confused. Since the S Series was already in the 7th generation, Samsung went ahead and launched the Note 6 as the Note 7 Smartphone. This was all acceptable because it’s a logical decision and the phone was launched & made available to the buyers from the USA, China & Dubai while consumers in other countries were waiting after pre-ordering the Note 7 & Samsung had anticipated great sales. The launch was very much timed weeks before the new iPhone launch event, where Samsung expects to take away a decent chunk of the iPhone 7 plus buyers.
When the product was launched, it did receive great positive feedback with devices not available within a few days and the delivery days pushed to a few weeks later in certain markets. This was all great before the reports of a few explosions came up. Following this, the news went viral & we starting hearing these kind of news on a daily basis that was later not just limited to the Samsung but also to Xiaomi, OPPO, OnePlus, LYF & also to Apple. You can refer to our Note 7 Timeline to go through the whole story but the brand did start recalling the initial batch and within 3 weeks came out with a replacement batch. To avoid confusions they announced that the new devices would have a black square box though that would not be the right solution & sadly few of these replacement note 7 devices also started exploding apart from overheating and battery issues.
There have been several reports that the phone explosion in this series is the worst the brand has seen in this decade but above that what is more important is that they went ahead with a global recall. Not announcing the cost of recalling the devices, the PR nightmare, and the opportunity loss in the number of sales to the competition probably Apple & to a little extent to Google who had launched the Pixel devices.
Biggest Recalls in the History:
Samsung has created a history by becoming the first brand whose Smartphones have been recalled globally though there are still speculations that more than a Million devices are in the hands of the consumers. The recall was made in the interest of the consumers and what matters more is that we have already been hearing about product recalls from time to time, while this is quite normal in the Automobile Industry. If you take a look at the 10 Biggest Automotive Recalls Ever you would notice that Ford went ahead with 21 million cars recalled which is probably a huge task. You are not talking about a Phone that could just be couriered but a car that has to be sent to a distant location. These processes involve a huge amount of time investment, costs & also creates a fear in the consumer’s mind who might think twice the next time they are going to spend money on that certain brand.
Following this, if you notice every year there has been an average of at least 10 million vehicles recalled, and they might be for several reasons ranging from Ignition Problem, Fire Strikes, Seatbelt Scandals or Out-of-Control Gas Pedals. You can go through these few references on Investopedia that mentions the same in detail. Most of these recalls have cost the respective brands billions of dollars and years of hard work to trust back the confidence of the consumers.
Brands Affected with this Recall:
According to a few media reports around half a million devices were sold in Korea while more than 2 million units were shipped worldwide. When we talk about a recall, it’s not something that affects the brand but also the suppliers who manufacture the parts required to build the final product. All of them work hand-in-hand to ensure that the product is delivered at the right time with no margin for error though unfortunately there was some in this case. After Samsung had acknowledged 35 cases, they had mentioned about thorough inspection with their partners & suppliers who are all affected unless their inventory could be useful for other products that Samsung sells. If you take a look at the Note 7 specs, you will find that the device has high-end hardware, stylus, and display that’s not available on other devices making it hard for the suppliers to reuse the inventory on another product lineup. Although, according to Phoenix Semiconductor that services upto 25% of the requirements for Samsung, they are unfazed with this fiasco.
How much was Samsung Affected?
Whenever there is a product recall, we can safely presume that there is a huge cost associated with this process while in the case of Samsung there was initially a recall that is not going to continue with replacement. In this case, Samsung will be taking back the devices & completely discontinuing the product itself considering that there wasn’t much of a fix available for the problems that came out. The situation is embarrassing considering that this is the Number #1 brand in the Android Ecosystem with Millions of Smartphones sold every year. According to the consumer protection laws, the manufacturers and the suppliers should be bearing the costs of these processes & this is where the insurance companies would just skip taking minimum costs.
Apart from the lost sales, the brand should be expecting lawsuits, lost confidence from the customers and drop in stock prices. Again the stock loss is not just limited to the primary brand but also to the suppliers whose business is also dependant and overall in case of Samsung we have already seen a $22 Billion lost as reported by Bloomberg. The loss would be larger than this if you count into the losses of the suppliers, the brand reputation, the cost of disposing the product and the lost business with the expected sales from that product. To cut short according to a few analysts, this fiasco would end up with Samsung losing $50 Billion+ in revenues.
The Respectful Act:
Samsung didn’t take it long before quickly announcing that they would recall the devices globally & they started working with multiple agencies to ensure that the job is done. Instead of giving it a few tries, excuses and keeping the consumers waiting they just went ahead with the global recall. This is probably the safest way to save brand recognition and will also officially stop the brand from getting more flak around the situation. The brand not only offered a complete refund but also offered an option for alternate device or a $100 bill credit in the US for the patience and as a sign of appreciation.
To cut short I think this act should be respected by the consumers because being a global brand; Samsung went ahead taking in a deep loss that would take years to recover, but it was taken in the interest of the consumers. There have been thousands of jokes, videos and also stories on how the next Samsung’s device could explode but above all these, we should be respecting the brand because they not just accepted that there was a problem but also went ahead with a solution. If you know someone who is still holding the Note 7, you should be suggesting them to send it to the nearest service center & get a full refund instead of waiting and hoping that there would be a fix on the same. Do you think you would buy the next Samsung Smartphone i.e. the Galaxy S8 or have you lost trust on the brand? Let us know with your feedback on this story in the comments section below.
Note: Do make a note that these are my personal thoughts and do not reflect any bias towards the brand.