Galaxy Note 7 disaster could cost Samsung $17 billion, plus disposal costs
Tue 11 Oct 2016
Today final confirmation came that Samsung is discontinuing production of the cursed Galaxy Note 7, whose explosive overheating problems have dominated tech headlines for the past week – and analysts are estimating lost sales of 19 million phones, and revenue of nearly $7 billion.
The South Korean tech manufacturer, which had already recalled 2.5 million of the affected Galaxy phones, attempted a rescue of the situation over the last week with an issue of revised models, 50 of which subsequently proved to have the same tendency to explode.
Pressure fro regulators and wireless operators caused Samsung to halt all sales of the device on Tuesday, a move which had been precipitated by vendor bans and stipulation from the Federal Aviation Authority that the model may not be turned on or charged during flights.
Edward Snyder, managing director of Charter Equity Research, commented that the device’s woes have “probably killed the Note 7 brand name”, whilst Credit Suisse and other analysts tally the cost of the recall and trashing of the brand at around $17 billion. Additionally it is estimated that the cost of disposing of the prodigal phones is likely to exceed 1.6 trillion won.
Analysts at Nomura posited that the Note 7 stigma could spread to other unaffected phone brands within Samsung’s line-up.
On the plus side, human nature indicates that if Samsung survive the Note 7 storm, whatever flagship smartphone eventually succeeds it will have the most thoroughly tested batteries in the sector.
But this is distant, future comfort, and the launch of Google’s Pixel phone into a crowded high-end, high-brand market, means that the timing could hardly be worse for the Suwan-based tech giant.
Unknown factors in damage control and retribution for the Note 7 affair include the prospect of lawsuits from affected consumers – two have already been initiated in the United States alone.