Analysis After killing the Note 7 smartphone, Samsung wrestles with disastrous blow to its image

Samsung Electronics Co. is corporate royalty in South Korea. It’s also a company recognized 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 ton of negative publicity by the media in the US, Europe and China, not to mention the vast echo chamber of social media?

When it recalled its 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,” said Srinivas Reddy, director at the Center 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 US$1 billion and $2 billion, but that figure will now certainly rise.