Samsung takes multi-billion-dollar hit to end exploding phones fiasco

“Samsung has killed off the Galaxy Note 7 in the hope of limiting the fallout from its exploding smartphone fiasco,” Jethro Mullen and Mark Thompson report for CNN. “The South Korean firm decided Tuesday to permanently halt sales and production of the Galaxy Note 7 just hours after telling customers to stop using all versions of the smartphone. Its stock plummeted 8% in Seoul, wiping about $17 billion off the company’s market value.”

“It was forced to recall about 2.5 million Note 7s in early September, just two weeks after the phone was launched, saying faulty batteries were causing some to burst into flames,” Mullen and Thompson report. “It then started to issue replacement phones but a number of customers reported that those devices were also catching fire, including one aboard a passenger jet.”

“Top priority will be to establish what exactly went wrong. The company initially blamed problems with a battery from one supplier. Experts say they believe a design flaw may have been responsible,” Mullen and Thompson report. “Analysts say as many as two million devices may still be in use around the world… Analysts at Nomura estimate ditching the Note 7 could mean $9.5 billion in lost sales and wipe out $5.1 billion of profit.”

Read more in the full article here.

MacDailyNews Take: The damage to the brand is the real problem for Samsplode. A problem the South Korean dishwasher maker so richly deserves.

The fallout will be a bigger, lingering issue versus the initial explosion.

Thermonuclear
Thermonuclear.

SEE ALSO:
Beleaguered Samsung permanently ceases Galaxy Note 7 production – October 11, 2016

21 Comments

  1. Oh man yeah. It was as if kismet guided The Fickle Finger Of Fate as a major course correction for this SamSplodian disaster, of their own hubris & making. “Richly deserved” is an understatement. Thought you’d get ahead of the game and Apple by taking PQ shortcuts Scamsham? Not this time. It blew up like a proverbial explosive cigar in your faces and now you’re billions in the hole because of it. Will you learn anything from this? Doubtful.

  2. Sorry, but this is a real shame!

    We are only a few weeks away from Bonfire night (5th November) in the U.K.; plenty of people were looking forward to using a pyrotechnic app on their Note 7 to start their bonfires, simply by starting the App and throwing the Note 7 on the fire. Now they are going to have to use a lighter or a match; how uninspiring!

  3. Most of those experts who calculate the loss of sales and revenue are only looking at Note 7 (the explosive model in question here). However, they aren’t including the very certain and significant losses from the damage to the Samsung brand.

    Other Galaxy models don’t live in vacuum. They “proudly” carry their Samsung brand. And an ordinary person only hears “Samsung” when they watch the news about Note 7 explosions, recalls and cancellation.

    It is quite obvious that the ordinary public will be very skeptical of the Samsung brand for quite some time. Why bother taking a chance if you can get an iPhone (or, if you aren’t smart enough, LG, HTC, Moto…), which won’t get you banned from a flight, a cruise, a bus.

    Samsung is likely large enough to survive this debacle, but their market share is certainly going to be significantly diminished.

    1. They are also not calculating the long term leadership cost.

      Samsung could emerge a better QA company for this. But often in disasters like this individuals act to avoid blame more than fix things.

      Middle managers don’t really have a choice, they have to watch out for their own survival. The question is, will that dysfunction be a temporary storm or poison top leadership as well.

      If so, Samsung will have more leadership failures in their future.

    1. That is a clever sound bite, but in fact, more iPhone 7’s were sold on the first day of sales than all Note 7 sales combined so there’s no way that could be true. Not to mention that Samsung dragged their heels for weeks before being forced into an official recall by the US Product Safety Commission.

  4. You’re all wrong!!!!! The Galaxy Note 7’s are fantastic devices. I’m a prepper and I’m buying all I can to use as emergency fire starters when TEOTWAWKI happens.

  5. Feel free to donate your Note 7 to the nearest Boy Scout troop for use as fire-starters.
    But please don’t try to take the donations as a tax write-off; the IRS will not allow such perfidy.
    And please hand-deliver them; Note 7’s are banned from air-travel by the FAA…

    Those hapless koreans; they can’t do anything right in the last few years.

  6. Well, hey, like they pointed out at their launch, “You know what else it comes with? An audio jack.”

    What good is that audio jack if your copycat phones are catching fire? Hmm?

    And I can bet you that their phones will not have a headphone jack next year.

    They will continue to “lead, by following”. Only they could deliver lines like this…

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