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October 12, 2016

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Samsung finally pulls the plug on Galaxy Note 7

Source: AFP | October 12, 2016, Wednesday | Print Edition

SAMSUNG ended the controversy over its troubled Galaxy Note 7 smartphone yesterday, permanently discontinuing production of a device that has been mired in a disastrous recall over exploding batteries.

Earlier in the day, the South Korean conglomerate halted sales and exchanges of the Note 7 and urged customers to stop using them, following reports that replacements for combustible models were also catching fire.

The move sent Samsung’s share price into a steep dive and, once the markets closed yesterday, the company announced it was scrapping the model entirely.

“Putting consumer safety as the top priority, we have reached a final decision to halt production of Galaxy Note 7s,” it said in a statement.

While numerous analysts had predicted just such an outcome, it was still a stunning move for a company that prides itself on the quality production of cutting-edge technology.

It is especially damaging because the large-sized Note series, along with the Galaxy S smartphones, are Samsung’s flagship bearers in a fierce battle with rival Apple’s iPhones for supremacy in the high-end market.

The final decision came a little over a month after Samsung ordered the recall of 2.5 million Note 7s in 10 markets following complaints that its lithium-ion battery exploded while charging.

What followed was a PR disaster as reports emerged a week ago of replacement phones also catching fire.

“If it’s once, it could be taken as a mistake. But for Samsung, the same thing happened twice with the same model so there’s going to be a considerable loss of consumer faith,” said Greg Roh at HMC Investment Securities.

“The reason consumers prefer brands like Samsung and Apple is because of product reliability ... so in this case brand damage is inevitable and it will be costly for Samsung to turn that around again,” Roh said.

Samsung said customers will still be allowed to apply for a full refund or to swap their Note 7s for other Samsung products.

But it directed all its carrier and retail partners worldwide to stop Note 7 sales and exchanges — a measure several major distributors like US telecom firm AT&T and German rival T-Mobile unilaterally took last Sunday.

Samsung also advised all customers with an original or replacement Galaxy Note 7 to “power down and stop using the device” immediately — a warning echoed by the head of the US Consumer Product Safety Commission, Elliot Kaye.

“No one should have to be concerned their phone will endanger them, their family or their property,” Kaye said.

Samsung’s decision to halt sales and exchanges was “the right move,” Kaye said, adding that his commission was actively investigating reports of phones overheating and burning in a number of US states.

The US Federal Aviation Administration issued a guidance update, urging passengers to power off, and not use, charge, or stow in checked baggage, Galaxy Note 7s.

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