Samsung’s brand mystique seriously at risk after death of the Note 7
S.Korean tech giant has permanently ceased production of the Galaxy Note 7 smartphones after reports of devices it had deemed safe, caught fire
Samsung Electronics is corporate royalty in South Korea.
It’s also a company recognised for its marketing smarts and engineering savvy worldwide, so much so that consulting firm Interbrand ranked it as the world’s seventh most valuable in its 2016 survey, ahead of Amazon and Mercedes-Benz.
So how is it that the pride of South Korea has so botched the recall of 2.5 million Galaxy Note 7 smartphones after complaints of exploding batteries – and a tonne of negative publicity by the media in the US, Europe and China, not to mention the vast echo chamber of social mediaWhen it recalled phones last month, it assured consumers it had diagnosed the problem and that its replacements were safe. Not so it turns out: Customers reported the lithium batteries in new phones went up in flames too, in some instances. On Tuesday, Samsung took the dramatic step of killing off the Note 7 for good.
This is a calamity. The threat for Samsung is how soon they can get back. If they don’t get back soon, it provides a vacuum for others to creep in.
“This is a calamity,” said Srinivas Reddy, director at the Centre for Marketing Excellence at Singapore Management University. “The threat for Samsung is how soon they can get back. If they don’t get back soon, it provides a vacuum for others to creep in.”
The company has not said how many new or replacement phones will be affected. Analysts estimated that the original recall would cost between $1 billion and $2 billion, but that figure will now certainly rise.
Chung Chang Won, an analyst at Nomura Holdings, estimated in a research note before the company’s announcement the worst-case scenario of Samsung terminating the Note 7 would cost the company about $5 billion in operating profit through 2017.
The move sent Samsung shares down 8 per cent on Tuesday, vaporising $17 billion in market value. The stock dropped as much as 3.3 per cent Wednesday.