Subscribe For Free

Samsung’s reputation in flames after killing off Note7 flagship

Alex Yau
October 17, 2016

• Handset recall draws fire from industry • Meltdown could threaten smartphone market dominance

Samsung’s brand reputation has been “permanently damaged” after it was forced to axe its Note7 smartphone following ongoing safety issues.

This is according to analysts that spoke to Mobile News after Samsung ended production of the £739 flagship device on October 11 after new reports of the smartphones burning and catching fire.

Gartner research director Roberta Cozza labelled it the industry’s worst-ever recall. “The ramifications are serious. They had not sorted out the previous issue.

“This is probably the worst recall ever in the industry. It will permanently damage the brand.”

Edison Investment Research technology analyst Richard Windsor said: “Samsung appeared to still be shipping defective devices and that could trigger a large loss of faith.”

Canalys research analyst  Ben Stanton added that Samsung’s brand reputation had been “severely hit”.

Counting the cost

According to analysts at Credit Suisse, scrapping the Note7 will result in lost sales of 19 million phones, or £13.8 billion.

It recalled 2.5 million handsets on September 2 following 35 reports of the device catching fire. Replacements were issued from September 19, which Samsung claimed were safe. Over 45,000 had been sold in Europe through pre-orders, with the majority in the UK.

However, more reports of Note7 safety issues emerged, including one of a man in the US who said he was awoken at 4am by his Note7 engulfed in flames. There are no reported UK casualties.

Competition heats up

Analysts claimed Samsung’s position as smartphone market leader could now be under threat, with consumers choosing to switch to competitors.

According to Gartner, Samsung held a market share of 22.3 per cent at the end of Q2, followed by Apple (12.9 per cent) and Huawei (8.9 per cent).

Windsor claimed Samsung’s misfortune provides a greater opportunity for Google with its new Pixel smartphones.

“Galaxy Note7 owners are now likely to end up with devices from other manufacturers. Samsung’s meltdown is a big opportunity for Google to do far better with Pixel than it has with its previous Nexus devices.”

Cozza said: “Yes, shipments will be hit, but what’s more concerning is the trust customers will lose in Samsung. Users will probably shift to rival manufacturers because the options are less risky.”

Stanton also sees an opportunity for Huawei to capitalise, which has seen its global smartphone market share grow by more than a third over the past two years.

“The likes of Huawei or Google will drive aggressively into markets which have been long dominated by Samsung,” he said.

IHS mobile and telecoms senior director Ian Fogg said: “This is clearly damaging to Samsung’s brand, but the risk is that it won’t affect only the Note range but also other handsets. Samsung’s competition will be looking to pick up volume as a result of its problems.”

Share this article