None were able to get a phone to explode. Samsung’s engineers, on a tight
deadline, initially concluded the defect was caused by faulty batteries from
one of the company’s suppliers. Samsung, which announced a recall of the Note 7
devices in September, decided to continue shipping new Galaxy Note 7s
containing batteries from a different supplier.
The solution failed. Reports soon surfaced that some of the replacement
devices were blowing up too. Company engineers went back to the drawing board,
according to a person briefed on the test process who spoke on the condition of
anonymity because the internal workings were confidential. As of this week,
Samsung’s testers were still unable to reproduce the explosions.
By then, it was too late. On Tuesday, Samsung said it was killing the
Galaxy Note 7 entirely. The drastic move is highly unusual in the technology
industry, where companies tend to keep trying to improve a product rather than
pull it altogether. And it caps a nearly two-month fall for Samsung, which has
taken a beating from investors, safety regulators and consumers over its
trustworthiness — especially with a marquee product that was supposed to rival
Apple’s iPhone.
So the issue now is how will Samsung brand ever get over the impact of this
catastrophy and buoy consumer confidence ever again? Following this unprecedented
step of cancelling the Galaxy Note 7 entirely after battery fires plagued the
device and its subsequent, supposedly fixed, replacements, the team at Android
Authority weighs in on how serious this situation is for Samsung and just how
badly the Galaxy Note 7 fiasco has damaged the company’s image and the Galaxy
Note brand.
For these analysts, they don't see this being any more than a minor speed
bump for Samsung in the grand scheme of things. According to @KrisCarlon
"The company has more than enough money and alternate revenue streams to
weather the storm and I see no reason why – assuming the Galaxy S8 doesn’t blow
up – everyone won’t rush out to buy it just like they initially did with the
Note 7. It will take some time, but Samsung Mobile will recover. "The
damage to the Note brand will be significant, but not fatal. While I can
understand why Samsung “might” decide to kill off the Note brand and release an
S Pen-equipped device next year under a different banner, I honestly don’t
think a few exploding phones is sufficient to damage the brand beyond repair.
Plenty of Galaxy S4’s caught fire a few years back and no one ditched the S
Series, Samsung included".
To him, for the Note 7 to truly damage Samsung’s branding it would need to
negatively impact Samsung’s brand overall, not just the Note series. The real
question is just how long folks will wait to see if the next Galaxy is likely
to blow up before they inevitably decide to buy it.
For @GarySims, anyone who has studied business, finance or marketing in the
UK will have heard of the “Ratner effect”. The phenomenon is named after Gerald
Ratner, the CEO of the Ratners group, a major British jewelry retailer with
thousands of shops across the country as well as stores in the USA. In 1991,
Ratner gave a speech to the Institute of Directors at the Royal Albert Hall.
During the speech he jokingly commented about the low quality of Ratner’s
products and as a result the Ratner Group almost went bankrupt.
The lesson here is about branding. Damage to brands take a long time to
repair. Although the problems with the Note 7 were technical and although the
short term effect will be financial losses, the real problem is now about
branding. It won’t take long before consumers start to think negatively about
the brand. Next time someone is looking for a smartphone they might steer clear
of Samsung, because in the back of their mind there is a nagging thought that
Samsung smartphones catch fire.
So simply put, Samsung should just weather the storm and plan for a re-branding
campign!
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