Samsung races to replace faulty Note7

Mr Koh Dong Jin, president of Samsung Electronics' Mobile Communications Business, bowing at a news conference in Seoul on Friday. He said sales of its flagship Galaxy Note7 will be halted in 10 countries. Before the recall, the Galaxy Note7 had draw
Mr Koh Dong Jin, president of Samsung Electronics' Mobile Communications Business, bowing at a news conference in Seoul on Friday. He said sales of its flagship Galaxy Note7 will be halted in 10 countries. PHOTO: AGENCE FRANCE-PRESSE
Mr Koh Dong Jin, president of Samsung Electronics' Mobile Communications Business, bowing at a news conference in Seoul on Friday. He said sales of its flagship Galaxy Note7 will be halted in 10 countries. Before the recall, the Galaxy Note7 had draw
Before the recall, the Galaxy Note7 had drawn praise for such features as an iris scanner and a big screen with curved edges.PHOTO: EUROPEAN PRESSPHOTO AGENCY

It gives itself 2 weeks to fix battery fire problem and start replacements

SEOUL • Consumers have only so much patience - and that is why Samsung has given itself a two-week deadline to start replacing Galaxy Note7 phones which have faulty batteries that can catch fire and even explode.

As Apple prepares to unveil its latest iPhone in less than a week, the South Korean electronics giant needs to reassure customers its premium handset is safe. The stakes are high. Samsung has maintained its lead in smartphones - despite a global slowdown in handset sales - and fended off Android rivals in China and elsewhere with high-quality phones and unique features.

If the Note line fails to recover, Samsung risks being seen as just another Android phone-maker and may give upstart rivals an opportunity to close the gap.

Said Ms Laura Ries, president of brand strategy firm Ries & Ries: "For a high-end product, that means you go out of your way to give people replacements, get out in front and handle the problem."

Before the recall, the Note7 had drawn praise for such features as an iris scanner and a big screen with curved edges. But only two weeks after the debut, Samsung was beset with reports of faulty batteries that overheated while charging, resulting in charred phones.

It clearly decided to fix the problem quickly, whatever the cost, rather than risk even greater damage to its reputation should more phones explode and hurt people.

What is more, Samsung has a big incentive to get replacement Note7s in the hands of customers as fast as possible, with the iPhone set to hit stores about a week after its unveiling. And it would not hurt Samsung to put this incident behind it well before the crucial holiday season, which last year accounted for about 28 per cent of handset sales.

But the replacement programme is not an official recall programme with the blessings of government officials, said Mr Jerry Beilinson, a technology editor at Consumer Reports. The company has not said which devices have the faulty battery and which ones need to be replaced, leaving customers unsure if they should continue using the phone. The company risks losing some loyalty if it does not provide more details and guidance, he said.

As long as the problem does not persist and the resolution is fast and comprehensive, the long-term impact will be minimal. In the United States in particular, the Note7 has the advantage of being seen as the only viable Android alternative to the high-end iPhones, which means diehards will not abandon the brand, said Mr John Butler, a Bloomberg Intelligence analyst.

In recent months, Samsung has been expanding its already considerable market share. It shipped 77 million smartphones in the second quarter for a market share of 22.4 per cent, that is up from 73 million, or 21.3 per cent share a year ago, according to market intelligence firm IDC. Apple's shipments dropped 15 per cent to leave it with an 11.8 per cent market share. Huawei posted an 8.4 per cent increase and Oppo doubled shipments from a year earlier.

The recall could rob Samsung of the momentum it had built by capitalising on a lull in demand for iPhones between new models. Sales of the Note7 will be halted in 10 countries, Mr Koh Dong Jin, head of Samsung's mobile division, said on Friday. He said there are about 2.5 million units in the hands of users.

Mr Lee Seung Woo, an analyst at IBK Securities in Seoul, estimates that about one million handsets are affected by the battery problem, with about 600,000 sold overseas.

BLOOMBERG

A version of this article appeared in the print edition of The Sunday Times on September 04, 2016, with the headline 'Samsung races to replace faulty Note7'. Print Edition | Subscribe