Samsung burns out

The leading brand and historic competitor of Apple has had to face some difficulties lately and most precisely since the Galaxy Note 7 has been on the market.

 

 

 

The new smartphone of the brand failed

Launched on August the 2nd, Samsung’s latest smartphone, the Galaxy Note 7, was eagerly anticipated. Planned to be in competition with the iPhone 7, which has been on the market since October 16th, the new top of the range product of Samsung was aiming to tackle the bottom of the range Chinese smartphones as well. With its €859 price for the European market, it was commercialized on August the 19th.

Yet, whereas the Note 7 was considered as the best smartphone to fight this way the disappointing results for the last few years, problems were on their way – it seems that the battery overheats and could explode.

Smartphones on fire

Although the company got better market share than its American competitors (22.4%), there has been at  least 35 incidents that have been reported and that have led Samsung to recall its products a month after its commercialization, which is 2.5 billion smartphones. The battery explosions could have cost the South Korean giant nearly $1 billion   to recall.

In September, the group asked South Korean consumers not to use their smartphones anymore until they were replaced the  operation would start the following week.

Collapse at Seoul

On September 12th, Samsung’s share price collapsed by 7% in the Seoul stock market after the announcement of recommended precautions by the giant of the phone sector. The loss is estimated at 15 000 billion South Korean won, the biggest on a session for the manufacturer.

At the beginning of October, Samsung resumed sales in South Korea. Despite the fact that 80% of the smartphones have been changed, some users have seen their new one overheat. With these new complaints, the company reassured its consumers that it was just a few isolated cases.

Devastating crisis management and end of the disaster

Even though the failing smartphones were replaced and the new complaints defused, the problems concerning the battery explosion remained. On October 5th, an airplane was evacuated after the Galaxy Note 7 started to smoke whereas it  had been replaced.

And the poor crisis management settled by the South Korean group can only be noticed given that on October 11th they actually admitted that the replaced products, which have been distributed, really had a problem.

With this case, it’s the reliability and the trust in the brand that have been damaged and may have benefited Samsung’s competitors and first of all Apple, the market leader in top of the range smartphones.

In order to avoid other incidents, the company announced on October 11th that the Galaxy Note 7 will no longer be produced and commercialized.

Financial forecasts and compensations

Samsung Electronics foresees a loss of its profits estimated at $5.3 billion in this quarter because of the Galaxy Note 7. Moreover, the brand has undertaken to pay financial compensation to its customers in South Korea and in the United States if they accept to change their Note 7 for another smartphone of the brand. This is aiming to stem the impacts on the sales.

Samsung vs Apple

As if it was not enough, Samsung has just lost against Apple in a court battle. The cause of the legal battle was the slide to unlock function on the smartphone which was patented by the juicy brand.

Although the two groups had signed an agreement on this issue, Samsung had gone back by justifying itself to have been forced. The court has had to intervene again and has sentenced the South-Korean firm to pay the amount of $119.6 billion.

Another point of contention is the design of some smartphones. The American brand reproaches once more Samsung with having copied them especially concerning the round angle of the smartphones box.

However, Samsung can still have a little hope the Supreme Court has to rule on the patent issue and could come back on the notions of technological innovation and copyright protection.

Cindy M.