Samsung Insiders Detail Chaotic Note 7 Recall: “Everybody Loses”

Reports of Samsung Galaxy Note 7 smartphones catching fire just don’t stop, even after the recall was officially announced. Yesterday’s report of a replaced Note 7 starting to smoke on an airplane further increases both financial and brand damages for the South Korean smartphone manufacturer.

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According to Samsung, most of the fire-prone Galaxy Note 7 handsets have been recovered in major markets, including the US and its home land, but the trouble is not over. The report of the faulty replacement unit has crushed Samsung’s hopes of getting ahead of the crisis.

Since the reports of exploding Note 7 handsets emerged, Samsung has lost $16 billion in market value. The crisis seems to be worse than any the company has faced, according to a source speaking with Reuters.

“It directly impacts our products, our brand, and trust with consumers,” this person said. “If this doesn’t get fixed quickly, everybody loses,” said a second Samsung source, who didn’t want to be named due to the sensitivity of the issue, adding that as yet there was no finger-pointing at Koh or other executives.

It now depends on how the manufacturer’s mobile division chief, Koh Dong-jin, who issued a public apology last month, will handle the situation. He’s running this division for a year and previously declared himself lucky to be running Samsung’s smartphone business. But, as it turns out, his comment was somewhat hasty.

To deal with the Note 7 recall, which affects ten countries, Samsung formed a dedicated team of public relations staff in order to speed up decision-making and contain damage, according to sources:

“We share information instantly and far more widely than usual. We try to reply more promptly,” said one of them, who noted how complex it was to deal with a recall across 10 nations spread across the globe.

Samsung employees say the recall has dominated internal meetings since the Sept. 2 announcement, whether it be efforts to get the recalled phones off the streets or deal with a continued stream of claims and reports of damages or problems.

The negative publicity around the Note 7 comes at the perfect time for Apple, which has just launched the iPhone 7 and 7 Plus.

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  • Wall Man

    Please point to where the article ” … details chaotic Note 7 recall…”

    They setup a dedicated team, they freely share info and try to coordinate 10 country recall of millions of devices. Have weekly and I bet daily update meetings.

    Pretty standard stuff.

    Now it is either their suppliers or something with internal QA that let “fixed phones” out the door. That has got to hurt and is being reflected in the stock price.

    Chaotic to me means that nobody knows that is going on. And inconsistent messaging is going out to countries and cell phone carriers. May that is happening and I just don’t follow the recall closely enough cause it does not affect me.

  • “Some of the toughest criticism leveled at Samsung has been over its fumbling of the recall.

    It warned affected users to immediately turn off their phones only after the same warning was issued by the U.S. consumer protection agency. The regulator criticized Samsung for not following proper recall procedures.

    Some consumers also complained about the replacement phones, either saying they lose power too quickly or run too hot.

    In China, where Samsung says its Note 7 uses safe batteries, some users claimed their phones caught fire, while it was forced to delay resuming sales in South Korea due to a slow recall progress.”

    Samsung opted NOT to go through the US Consumer Product Safety Commission, something Consumer Reports slammed them on from the beginning. Clearly, management wasn’t sure what to do, or didn’t go through the proper channels from the beginning. It wasn’t until more battery explosions happened did the seriousness of the situation come to light.

    As the article states, they did not send a clear message to consumers, downplaying the real risk of these exploding batteries in the wild, which is why airlines are banning them onboard, even Air Canada.

    This story is really bad, because if a replacement Note 7 caught on fire as claimed, then Samsung has botched the recall. How can a replacement device catch on fire?

  • FragilityG4

    When your replacement phone for your defective phone also catches fire I think it’s safe to say Samsung has no idea what’s going on … thus chaotic.

  • FragilityG4

    I think this is a great opportunity for Googles Pixel. People that might like the Android platform (????) can stay within that ecosystem but avoid burning their pocket … their wallet on the other hand …..

  • KS

    A company, often touted as an only real competition to market leader Apple, has to dedicate work hours and manpower to a failed product even three months after its launch, when they should’ve been moving on to other projects but can’t and thus affecting those other projects in the pipeline, when they have to tackle news of this product bursting into smoke randomly around the globe, when they have to be at their PR best and yet know they’ll fail, when their manufacturing is affected because they now have to ship products again to the same customers and hoping that they still want it – I’d call that chaotic.

  • FragilityG4

    I agree on your points but that was a long run on paragraph. Sorry for grammar policing but it has to be said.

  • swotam

    Samsung should have got out in front of this thing as soon as it started to gain traction, someone should have become the public face of the company who took ownership of this. Think Steve Jobs on the antennagate thing. Once it became a “thing”, he became the public voice of Apple, publicly took ownership of the problem, offered a solution (free bumpers), and pretty much nipped that problem in the bud.

    For Samsung that didn’t happen, nobody owned the issue, they didn’t get the recall underway as quickly as they should have, and had a whole mess of different situations depending on which country you were in, etc. Now they’re too far behind to ever recover, and the damage to their brand has been incredible. The Note line is basically something that they should just kill at this point, re-engineer, and then release in a year or so under a different name.

    And on top of this, now they have Google to content with from a hardware perspective, not only in handsets, but also VR (Samsung is in bed with Occulus). This isn’t going to be a good year for them, that’s for sure.

  • swotam

    Samsung should be extremely worried about Google entering their turf with products that compete directly against theirs. Now they have their chosen OS vendor offering mobile devices and a VR solution that in all likelihood will be better than what Samsung is able to deliver at this point, especially with the Google Assistant AI stuff being built into the Android implementation on the Pixel.

  • Salinger

    I agree except for your analogy. Steve Jobs never took ownership of the antenna problem. In fact he famously said “You’re holding it wrong”. Apple NEVER officially acknowledged there was a problem but just gave the impression they were offering the bumpers to assuage users who felt there was a problem, when there really wasn’t. (of course, there was).

  • swotam

    Fair enough, Jobs did make his dismissive statements in the beginning and it wasn’t an immediate thing to be sure, but at the end of the day Apple “owned” the issue by having their press conference to discuss attenuation and giving the press tours of their sound testing chambers and all that, and then handing out the bumpers (and I think telling people they could return the phone if they really had a problem with it?). Once they did that the whole “issue” sort of disappeared because people got a free thing and Apple had stepped up sufficiently to the point where it became a non-issue. They didn’t let it get our of their control like Samsung has done with this recall.

    Jobs ended up being the public face of the problem via the press conference was more what I was going for.