Can Samsung Overcome The Galaxy Note 7 Debacle?


Bangalore: Very few enterprises in the world would have had the misfortune of witnessing the launch and death of a product within a few months. Samsung’s official announcement on ceasing production of the Galaxy Note 7 might curtail the immediate impact, but the company may find it tough to manage the legacy.

A critical component that Samsung could use to limit the impact of the exploding batteries would be handling customer relations. Reports suggested that the company is attempting to mitigate brand damage with a $100 incentive to all Galaxy Note 7 owners to purchase a replacement product from Samsung.

While the US Administration has decided to recall all Galaxy Note 7 phones – a mammoth 1.9 million pieces – things haven’t gone all that bad for the company in India. Of course, the security staff at airports request passengers to switch off Galaxy Note 7s if they are carrying one. Other than that, things are normal, largely because the company postponed the release of Galaxy Note 7 twice due to exploding batteries elsewhere and never did formally launch it here.

Channel partners contacted by our team said sales of the Samsung phones have taken a hit though not everyone is concerned by the battery fiasco. What’s more, they are yet unaware of what steps the government would take, given that Samsung has stopped production and the US government has initiated a total recall of the product from the market.

On its part, the company has formally killed the Galaxy Note 7 (Read our report in, but it still remains to be seen what they would replace it with and how they are going to rebuild the reputation of Samsung as the prime challenger to Apple and its smartphone legacy.

Some of the resellers in Bangalore and other southern cities were skeptical about the entire show. “We have not received any formal communication of the withdrawal though company representatives did provide us with inputs based on what they found on the official website,” a dealer in Bangalore said. Of course, since the phone didn’t launch here, they are not sure how to deal with cases where customers bought the product outside and are using it in India.

The statement in question can be found on the Samsung website. It says, “We are working with relevant regulatory bodies to investigate the recently reported cases involving the Galaxy Note7. Because consumers’ safety remains our top priority, Samsung will ask all carrier and retail partners globally to stop sales and exchanges of the Galaxy Note7 while the investigation is taking place.”

However, given that the United States is the largest market for smartphone sales, Samsung has taken additional steps to assuage customer feelings. They have provided a detailed note on the refund and exchange program (Read it here), which, the Indian channel partners hope would be replicated here too.

This brings us to a larger question – How does Samsung overcome all the bad publicity that it has received over their much-hyped and highly appreciated product?

Channel partners believe that an honest approach would go a long way in ensuring that Samsung continues to hold on to their market share, though in the short term it would definitely benefit Apple’s iPhone 7 and the newly launched Google Pixel phones.

Globally, the company could take a big hit in terms of revenues, but that should not really unnerve the $235 billion technology giant. “There have been instance of PCs smoking or burning, but companies have worked swiftly to recall the product from the market and provide replacements,” says a large re-seller in the southern market, on conditions of anonymity.

In fact, most of the resellers we contacted appreciated Samsung for recalling a faulty product. “It takes lots of guts to stand up and do the right thing. We are really happy that the Galaxy Note 7 has been recalled. We are waiting to hear how the company would go about the process in India,” says a Chennai-based retailer who has been stocking Samsung products for close to a decade.

Even on the global level, channel partners seem to be favoring Samsung, as a report published in (Read it here) quotes several partners to suggest that they would continue to back the Korean giant whose products have stood the test of time.

On the face of it, Samsung seems to have overcome the worst of the problems though they must speed up their response in other geographies too in order to ensure that customer loyalty and channel partnerships remain intact.

Meanwhile, Samsung India today strongly refuted claims made by a research agency which claimed that losses on account of the Galaxy Note 7 failure could be to the tune of Rs.6,450 crore. (Read the report published in The Mint)

The statement said: “Samsung India is appalled by the incorrect reporting of company’s financials based on reports by various research agencies. The reports covered in some news articles quote different revenue loss estimates for Samsung India. These research reports are not based on empirical facts. Such projections by any research agency or analyst, therefore, is incorrect.

“Samsung has not sold Galaxy Note7 in India. However, we can confirm that contrary to these reports, we are headed for record sales of mobile phones this year. The festive season has started for Samsung on a high and we have strong support and trust of our customers,” it added.

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