Samsung, Burned by Galaxy Note7
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samsung （SSNLF） was off to a great start this year as its stock price escalated to over$1，500 per share on the back of its most popular flagship device， the galaxy S7. However， that story suddenly changed due to the recent Note 7 disaster.
The company launched its new flagship device， the Galaxy Note 7， in order to compete against Apple’s（NASDAQ：AAPL） iPhone 7. Later it was found that Note 7 models were exploding due to some battery issues. To overcome that problem， the company announced a recall and launched a new software upgrade for batteries.
Even after the first recall， the problem was not solved and the company was forced to halt the production of the Note 7. The discontinuation of the device was a major advantage for sales of the iPhone 7， as Apple and Samsung are the two most significant players in the smartphone industry.
After all this， the problems were still not over. After the Note 7 disaster， Samsung announced a recall of 2.8 million top-loading washing machines due to reports of the lids detaching while in use， posing a threat of injury from impact. Both incidents have heavily impacted the company’s reputation and Samsung is still trying to remove the stains.
Samsung starts fire-phone Note 7 recall in China
IChina’s quality watchdog said Samsung Electronics Co Ltd’s local unit will recall all190，984 Galaxy Note 7 phones that it has sold in the Chinese mainland. Samsung earlier in the day halted sales of its Galaxy Note 7 smartphones and told owners tostop using them while it investigates reports of fires. The move has raised expectations the techgiant will scrap the flagship device.
The latest recall in China includes the 1，858 earlyreleased Galaxy Note 7 smartphones that the watchdog ordered to recall on Sept 14. Samsung shares plunged over 7 percent after the company announced Note 7’s global sales halt and exchange. The smartphone conglomerate’s shares fell 7.02 percent as of 1：50 pm， the largest intraday drop in a month. The company said on its website that the decision was made after consulting with relevant authorities.
Although a precision investigation is underway over recently reported cases of replacement note7 phones catching fire， Samsung said it decided on the temporary suspension for the sake of consumer safety. “Consum-ers with either an original Galaxy Note7 or replacement Galaxy Note7 device should power down and stop using the device，” the company said in statement.
It said the company is closely cooperating with partners and mobile carriers for consumers using Note 7 phones， promising to notify the consumers of followup measures， such as exchange for other devices， as early as possible. According to China Daily， in late September， Samsung apologized to Chinese consumers for failing to provide a detailed explanation over the safety of its Galaxy Note 7 smartphones on sale in China after more reports of fires involving the product.
Samsung said in a statement that the smartphones sent for customers in China use batteries from a different supplier， compared with the smartphones recalled at overseas market， and they can ensure the safety of these products that have passed testing and certification and analysis of the independent third-party research institute.
At present， the new Note 7 products that have been swapped at overseas markets are using the same battery supplier to those that are used for the Chinese version， Samsung said.
The company has begun a limited recall of the phones that affects 1，858 smartphones provided in July and August on a trial basis before the phone’s official launch on Sept 1 in China. Samsung said as these 1，858 phones use the similar batteries with those previously sold in the United States and South Korea， they have potential risks. Samsung said it has recalled most of the testing phones and was communicating with users for the rest phones.
Galaxy Note 7 Recall MayContinue to Year-end
Samsung Taiwan said that a move by the South Korean electronics giant to recall its problematic phablet ― the Galaxy Note 7 ― could continue until the end of this year. The company also urged local customers to apply for a refund or exchange the faulty product for a different Samsung model as soon as possible.
After the Galaxy Note 7 went on global sale in August， a total of 42，000 units were sold in Taiwan before multiple reports of the flagship smartphone model catching fire or exploding due to an overheated battery appeared around the world. In mid-September， Samsung began to offer local customers a refund， a new Galaxy Note 7 or other Samsung model as part of a global recall program. However， the exchange for new Galaxy Note 7s was suspended in mid-October after several replacement devices also exploded.
Thereafter， Samsung announced a program allowing customers to apply for a refund or exchange the Galaxy Note 7 for the Galaxy S7 Edge or Galaxy Note 5. Those who took advantage of this offer before Nov. 15 also received a NT$3，000 coupon. As of Nov. 12， Samsung said， 77 percent of the Galaxy Note 7s sold in Taiwan had been recalled and expected that to rise to 80 percent. If distribution network inventory is included， the percentage is expected to reach 82 percent， very close to the 85 percent in the U.S. market， Samsung Taiwan said.
Citing an internal investigation， Samsung said that those who still own a Galaxy Note 7 have either not encountered problems when using it or are not rushing to take advantage of the recall as no deadline has been set. Samsung said that some Galaxy Note 7 owners may even want to wait for the launch of the South Korean vendor’s next flagship smartphone model before seeking to exchange their devices.
After negotiations with the National Communications Commission， Samsung said that it plans to set a deadline of Dec. 31 for the recall. Samsung may have officially discontinued the exploding Galaxy Note 7， but it looks like the company isn’t giving up on the smartphone entirely. Samsung is planning to sell refurbished Galaxy Note 7 units in 2017.
“Samsung has not made a final decision yet， but it will likely sell the refurbished note 7 units next year，”an anonymous industry source told The Investor （via The Next Web）. The source claims that Samsung will sell the refurbished handsets in emerging markets like India and Vietnam where low-end and midrange smartphones are more popular.
This may help Samsung in attracting new customers who want a flagship handset for a lower price， as pointed out by Ubergizmo. This would also mean that Samsung won’t suffer too much of a loss by simply disposing all of the Note 7 units that have already been returned to them.
However， selling refurbished Galaxy Note 7 units might also be just another disaster waiting to happen. Samsung is already working on the Galaxy S8 for 2017， and its sales will surely be affected if these refurbished Note 7 units also begin catching fire.
Samsung issued a global recall for the Galaxy Note 7 in early September when a number of units caught fire after being left charging for a long period of time. Samsung eventually halted production of the Note 7 on Oct. 11 when replacements units also began catching fire.
The company is still trying to get all of the Note 7 units back to its headquarters in South Korea where Samsung is investigating what caused the issue. The company still has no idea what made the Note 7 spontaneously combust.
If Samsung is confident enough to start selling refurbished Galaxy Note 7 units in 2017， it’s possible that the company might have already made a breakthrough on its ongoing investigation. That being said， this strategy is still risky， and it could put the company and a lot of its customers in jeopardy.
Samsung might not be ready to give up on selling the Galaxy Note 7， a new report says. That’s not necessarily exciting news. Sure， Samsung may finally fix the manufacturing issues that turned the phablet into Samsung’s biggest PR disaster. But customers may have a tougher time trusting Samsung a third time.
According to The Investor， Samsung is expected to sell refurbished Galaxy Note 7 versions at some point next year. “Samsung has not made a final decision yet， but it will likely sell the refurbished Note 7 units next year，” an unidentified industry source told the site.
Samsung is yet to explain why the first-gen Galaxy Note 7 exploded， and why the “fixed” units were still fireprone. So it’s likely the company won’t sell any Galaxy Note 7 units， refurbished or not until that happens. The report goes on to say that the refurbished Galaxy Note 7 units will hit emerging markets including India and Vietnam where low-end and mid-range handsets are popular. This seems to indicate Samsung is considering selling the phone for a lot less than its initial iPhone-grade price.
The Investor also notes one other plausible scenario for the Galaxy Note 7. The existing stock could be destroyed to set another example. The site reminds us that in 1995， Samsung Electronics Chairman had 150，000 Anycall mobile phones destroyed to emphasize product quality to Samsung executives and employees.
Samsung has a few million Galaxy Note 7 units on its hands， as many buyers returned the faulty units. Some diehard fans decided against ditching the phone in spite of Samsung’s requests， but it’s likely that Samsung still has a few million Galaxy Note 7 units on hand， phones whose fate is yet to be determined.
Samsung Apologizes for Exploding Note 7 and Washing Machines
Samsung continues to take additional steps to regain consumer confidence in its brands after two big product recalls. The South Korean electronics giant took out fullpage ads in major English-language American newspapers this week in an unprecedented public apology.
Meanwhile， the company continues to hint at new features for their forthcoming flagship smartphone， the Galaxy S8， in the hopes it will be able to wipe away the bad press and billion-dollar losses of the Note 7. The release date is now expected to be closer to mid-2017， though. For the past few years， Samsung had made major product announcements at the February Mobile World Congress， but may now wait until April to show off the S8， though some reports suggest it may just go ahead with the launch then， as that was probably the original plan.
In light of the yet unresolved problems with the Note 7， the company is playing its hand cautiously. The multimillion unit recalls of exploding washing machine and smartphones are without precedent in the company’s history. （Past recalls of similarly problematic devices have numbered only in the tens of thousands， now surpassed by an order of magnitude.）
To ensure the devices are shipped back， often in fireproof packaging， more and more countries are looking to penalize customers who hold onto them， and in New Zealand’s case， even using hardware blocking technology to kick all remaining Note 7s off the national wireless network.
Though the company is still keeping information about the cause of failure for the Note 7 from the public， the apology noted， “We have already initiated investigations with independent third party experts to carefully revisit every aspect of the device， including the battery， hardware and software， and manufacturing processes.” Though the battery has been identified by outside experts as the most likely point of failure， problems with the device’s circuitry and control systems， including power regulation， could also be found.
The technical specs of the S8 remain opaque. New reports say the phone will carry over the 2K screen， like the S6 and Note 7 use， format rather than introducing a new 4K one， but will now have a new ultrasonic fingerprint scanner from Qualcomm that replaces the analogue home button. The S8 may also feature a new virtual assistant， Bixby， with a dedicated function key on the device. As Geektime has previously reported， Samsung acquired Viv Labs last month to develop in-house artificial intelligence （AI） tools for consumer electronics. The company has since confirmed to The Wall Street Journal that Viv technology will be integrated into the S8.
Refurbished Note 7 Coming to India and Vietnam in 2017 C Report
Samsung is probably having the worst time of its existence. How often does it happen that a company launches a flagship phone which starts exploding all over the world？ The firm has to recall the phone， fix it and then return it but it still explodes. As a result， the model has to be discontinued and all the sold devices recalled with the full refund. This is the tragic story of Samsung Galaxy Note 7. Now， a report suggests that Samsung will
sell refurbished Note 7 in India and Vietnam. Refurbished Note 7 on the way According to The Korea Herald， Samsung will launch refurbished Note 7 in 2017. The news might come as a shock to many because Samsung has already recalled the device and halted the production as well. All this led us to believe that this was the last of Note 7 but it seems like that is not the case after all.
It appears that Samsung is not willing to let all that money be wasted. They want to get some of it back and they plan to do so by selling the refurbished Note 7 in developing countries like India and Vietnam. We all know that countries like India， Vietnam etc love mid-range phones. If the refurbished Note 7 is introduced here at a substantially lower price， there are no doubts that it will definitely sell in huge numbers. Think about it， Samsung’s name， Note 7s design and specifications available near around the Rs.30，000 mark. Intimidating， yes？
The Note 7 debacle was probably the biggest mess up in the history. It resulted in Samsung’s reputation being tarnished， goodwill is blown away and drastic plunge in the sales volume of Samsung mobiles. It is quite possible that Samsung has found an actual working fix to the problem and it is quite obvious for a manufacturer for willing to sell his product instead of dumping it all. Let us face it， though Samsung recalled all the Note 7 devices， not all of them were exploding or problematic.
Many reports which talked about the millions of dollars in losses to Samsung owing to Note 7 recall also hints at how many pieces were sold worldwide.
At the same time， we cannot be entirely sure of the safety of refurbished Note 7. This is because Samsung attempted to do so earlier too and it failed with flying colours. This means that the move to launch refurbished Note 7 could be a big disaster.
Top US and Australian carriers suspended sales or exchanges of the flagshipNote7s， while major airlines reiterated bans on passengers using the phones， after smoke from are placement device forced the evacuation of a passenger plane in the United States last week.
The premium device launched in August was supposed to compete with Apple Inc’s latestiPhone for supremacy in the smartphone market. Well received by critics， its first problem was ashortage as pre-orders overwhelmed supply. But within weeks of the launch images of charred Note7s began appearing on social media， inthe first sign that something was seriously amiss with the gadget.
Samsung has since recalled 2.5 million Note7s due to faulty batteries， and the latest reports offires in replacement devices is raising fresh doubts about the firm’s quality control procedures. Edward Snyder， managing director of Charter Equity Research， said it was important to get theNote7 off the market.
“This has probably killed the Note7 brand name， who knows if they’ll even be allowed to re-release it，” Snyder said.”By the time they fix the problem they have to go through recertification and requalification and bythe time that happens they’re going up against the （Galaxy） S8 launch.”
Samsung has temporarily halted the production of its fire-prone Galaxy Note 7 smartphones asfire cases were reported even with replacement phones， Yonhap news agency reported citing an official of Samsung’s subcontractor. The unidentified official was quoted as saying the production of replacement phones will besuspended in Vietnamese factories that have responsibility for the production of Note 7 phonesto be shipped globally.
The official said he heard that the decision was made in consideration of the safety of globalconsumers in the United States as well as in China and South Korea after consulting withregulatory authorities of the three countries. The suspension came as several cases of catching fire were reported even with replacementdevices. According to media reports， eight cases were reported， including five in the United States， one inSouth Korea， one in the Chinese mainland and one in Taiwan.
Samsung Shares Nosedive after it Halts Note 7 sale
Samsung Electronics’shares plunged over 6 percent after the tech giant said that it has decided to temporarily halt the global sales and exchange of its Galaxy Note 7 smartphones while it investigates reports of fires in the devices， as the tech giant scrambled to contain a deepening recall crisis.
The smartphone conglomerate’s shares fell 6.25 percent as of 11：00 am， the largest intraday drop in a month. The company said on its website that the decision was made after consulting with relevant authorities. Although a precision investigation is underway over recently reported cases of replacement Note 7 phones catching fire， Samsung said it decided on the temporary suspension for the sake of consumer safety.
“Consumers with either an original Galaxy Note7 or replacement Galaxy Note7 device should power down and stop using the device，” the company said in statement.
It said the company is closely cooperating with partners and mobile carriers for consumers using Note 7 phones， promising to notify the consumers of follow-up measures， such as exchange for other devices， as early as possible.
Top US and Australian carriers suspended sales or exchanges of the flagship Note7s， while major airlines reiterated bans on passengers using the phones， after smoke from a replacement device forced the evacuation of a passenger plane in the United States last week. Samsung’s decision to pull Note7s off the shelves for the second time in two months underscores the South Korean firm’s struggles to fix the over-heating issue.
The premium device launched in August was supposed to compete with Apple Inc’s latest iPhone for supremacy in the smartphone market. Well received by critics， its first problem was a shortage as pre-orders overwhelmed supply. But within weeks of the launch images of charred Note7s began appearing on social media， in the first sign that something was seriously amiss with the gadget. Samsung has since recalled 2.5 million Note7s due to faulty batteries， and the latest reports of fires in replacement devices is raising fresh doubts about the firm’s quality control procedures.
Edward Snyder， managing director of Charter Equity Research， said it was important to get the Note7 off the market. “This has probably killed the Note7 brand name， who knows if they’ll even be allowed to re-release it，” Snyder said. “By the time they fix the problem they have to go through recertification and requalification and by the time that happens they’re going up against the （Galaxy） S8 launch.”
Samsung Electronics Co has temporarily halted the production of its fire-prone Galaxy Note 7 smartphones as fire cases were reported even with replacement phones， Yonhap news agency reported citing an official of Samsung’s subcontractor. The unidentified official was quoted as saying the production of replacement phones will be suspended in Vietnamese factories that have responsibility for the production of Note 7 phones to be shipped globally.
The official said he heard that the decision was made in consideration of the safety of global consumers in the United States as well as in China and South Korea after consulting with regulatory authorities of the three countries. The suspension came as several cases of catching fire were reported even with replacement devices. According to media reports， eight cases were reported， including five in the United States， one in South Korea， one in China and one in China’s Taiwan.
According to China Daily， in late September， Samsung apologized to Chinese consumers for failing to provide a detailed explanation over the safety of its Galaxy Note 7 smartphones on sale in China after more reports of fires involving the product.
Samsung said in a statement that the smartphones sent for customers in China use batteries from a different supplier， compared with the smartphones recalled at overseas market， and they can ensure the safety of these products that have passed testing and certification and analysis of the independent third-party research institute.
At present， the new Note 7 products that have been swapped at overseas markets are using the same battery supplier to those that are used for the Chinese version， Samsung said.
The company has begun a limited recall of the phones that affects 1，858 smartphones provided in July and August on a trial basis before the phone’s official launch on Sept 1 in China. Samsung said as these 1，858 phones use the similar batteries with those previously sold in the United States and South Korea， they have potential risks. Samsung said it has recalled most of the testing phones and was communi-cating with users for the rest phones.
Samsung’s long-term prospects still look bright
On the other hand， the automotive industry is growing at a rapid rate and numerous companies are betting big on high-tech automotive futures. Samsung recently announced that it will buy Harman International Industries Inc.（NYSE：HAR） for$8 billion. Harman International is a leader in connected cars and automotive infotainment technology， as it owns various audio brands such as Lexicon and JBL.
According to ， global smartphone shipments may reach its peak by 2018， which is why Samsung has decided to enter into the automotive segment. The company holds a robust position in the consumer electronics market but has not had a substantial presence in the automotive segment. Therefore， the company’s decision to buy Harman International clearly suggests that it wants to make its presence strong in the rising automotive industry.
Taking every- thing into account， Samsung has accepted its mistake and is trying restore its reputation. Moreover， Samsung’s decision to purchase Harman is a smart move because it will build a strong foundation for its automotive approach. As an outcome， Samsung’s long-term prospects still look bright and investors should consider adding Samsung to their portfolios.