http://www.forbes.com/sites/ewanspe...ote-7-brand-battery-fire-damage/#144d62a7c361
Samsung's Galaxy Note 7 Damage May Not Be As Painful As You Think
Ewan Spence ,
Contributor
I look at the impact of mobile technology and online media.
Opinions expressed by Forbes Contributors are their own.
September 2016 was a tough month for Samsung Mobile’s team. Thanks to the incendiary battery issues with the Galaxy Note 7, the South Korean company was forced to start an expensive global recall to implement a fix. That fix didn’t work and a second recall was started, along with production of the handset ending. The Note 7 was expected to be one of the biggest selling handsets of the year. Instead it became a millstone around Samsung’s corporate neck.
With the phablet becoming the punchline of many late-night chat show sketches, announcements from airlines that the Note 7 was banned from flyers’ carry-on bags or hold luggage and Samsung’s every move analysed in-depth by the geekerati, the immediate assumption was that the battery issues around the Note 7 would be damaging to Samsung’s bottom line and brand name.
People walk by the new Samsung store in lower Manhattan (Photo by Spencer Platt/Getty Images)
There has certainly been a short-term financial hit to Samsung’s bottom line. Recalls are expensive with no commercial upside. Samsung’s losses could be as high as one billion dollars. Expect this to be reflected over two or three quarters of financial reports from the South Korean company.
There’s also the loss of income from not having the Galaxy Note 7 on sale. The phablet was expected to match the sales of the Galaxy S7 and S7 Edge. With the Note 7 removed from the market there was room for the competition to pick up potential sales. Google’s Pixel XL was an obvious beneficiary with many of the geekerati promoting it as an alternative. As a new brand in the market with limited stock the Pixel XL certainly had a sales boost but Google did not have the resources to fully exploit the gap in the market.
Neither did Apple. Although the iPhone 7 Plus is a natural competitor to the Note 7′s phablet form factor it also suffered the usual stock shortages that feature during the launch period of a new Apple device. No doubt other Android device manufacturers saw increased sales, but no handset stepped up to dominate the vacated space.
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People buy new iPhone models at a telecom shop in Seoul on October 21, 2016 (Photo: Jung Yeon-Je/AFP/Getty Images)
The other impact on Samsung that many (including myself) were expecting was to Samsung’s brand and image. Having your smartphone catch fire seemingly at random does not instil confidence in consumers. This wasn’t helped by a number of Samsung’s washing machines also being subject to a recall in the same period. Would this pull down Samsung in the eyes of the general consumer? A recent survey by Ipsos for Reuters suggests that is not the case.
With almost 6000 people questioned over the fifty states, existing Samsung users were just as loyal to the brand as users of Apple’s iPhone range. Comparing those who were aware of the Note 7 recall and those who weren’t, the survey suggested a similar level of desire to go with a Samsung handset if they were looking for a new phone.
As for the handsets which picked up the slack of the Note 7, it appears to be a mix of Chinese handsets as well as Samsung’s own Galaxy S7 and S7 Edge smartphones that were launched earlier in the year.
While the short-term financial damage is not welcome, Samsung is weathering the storm that the Note 7 has created. It is not losing the amount of ground to the competition that many thought. With the next flagship launch of the Galaxy S8 still some months away (and potentially delayed beyond the expected February launch), this survey is a positive sign for Samsung’s management that the Note 7 damage will be temporary.
Now read about one big feature the Galaxy S8 could drop…
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