Fans have mourned the loss of the Galaxy Note 7 — perhaps the best smartphone released in 2016 — and while a small few are determined to cling onto the device despite the risks, most have handed theirs back and moved on.
The whole debacle is going to cost Samsung billions in lost revenue, and it will likely take years for the South Korean company to regain the trust it has lost. But just how detrimental could the problem be for Samsung’s smartphone business?
Join us in this week’s Friday Night Fight as we discuss Samsung’s chances of recovering from the Galaxy Note 7 nightmare.
Killian Bell: Since we last discussed the Galaxy Note 7 in Friday Night Fights, Samsung has been forced to recall all units for the second time and ceased production for good. It’s thought the whole fiasco could cost the company a whopping $17 billion in lost revenue, and put a big dent in its reputation.
I’m still confident Samsung can recover from this. Although the recall could have killed a smaller company, Samsung is the world’s biggest smartphone maker. It has a market value of more than $213 billion, and $69 billion in cash sat in the bank. This $17 billion loss isn’t much in the grand scheme of things.
I do think Samsung should be worried about its reputation — especially if it continues to handle this second recall badly. According to some reports, the company has been trying to cover up some Note 7 explosions in recent weeks, and that’s not good. It also isn’t doing enough to compensate those who suffered property damage when their handset caught fire.
This isn’t something Samsung fans will forget in a hurry, but I do believe they will forgive if the company doesn’t make any more mistakes. It has already done a lot of things right and tried to make the return process as easy as possible for Note 7 owners. It has also offered discounts on other flagship devices for those who choose to switch to another model.
Maybe fans will be cautious about upgrading to the next Galaxy device as soon as it goes on sale, but I don’t think too many will be avoiding Samsung phones long-term.
What do you think, Luke?
Luke Dormehl: For a lot of people, I think this could be a tipping point. Samsung’s reputation has been in the gutter for years among smartphone fans who pay attention. Early Galaxy handsets were a blatant ripoff of the iPhone and severely lacking in functionality. More recently, the company has made strides to improve — and in terms of hardware it has — but I think this crystallizes a lot of what people feared: that Samsung is a reactive company that will rush out products before they’re properly finished.
Go back and look at the number of shots Samsung took at Apple for “bendgate,” a minor manufacturing weakness that affected a tiny number of iPhone 6 owners. With the Note 7, what has happened is close to negligence. We’re incredibly lucky that no-one was hurt — but already we’re hearing reports about the number of ex-Note 7 customers who are heading over to the iPhone 7.
Even before Samsung announced it was stopping production of the Note 7, one survey suggested that 26 percent of Note 7 owners planned to get iPhones as their replacement handset. That’s considerably more than the 21 percent who said they’d swap it for a different Samsung phone like the Galaxy S7.
And it’s not just the Note 7 that’s damaging Samsung, either. It’s being increasingly squeezed on the lower-end of the smartphone manufacturing business by low-cost Chinese OEMs. This quarter marked the second in a row in which Chinese smartphone makers produced more phones than market leaders Apple and Samsung. How many of those customers would have otherwise bought iPhones? I suggest a lot less than would have purchased cheaper Samsung handsets.
Do I think this disaster will bring down a company like Samsung, which as its fingers in many, many pies which go far beyond just smartphones? No. Do I think that this could be a point of no return in terms of damaging the company’s reputation as a high-end phone maker able to compete with Apple? You bet!
Killian: I totally disagree with that. Samsung’s reputation has only gotten better in recent years. It used to be criticized for making phones out of cheap, tacky plastic, and bogging them down with bloated software. But its more recent Galaxy devices have been some of the prettiest smartphones money can buy, and TouchWiz is now a terrific Android UI.
This is one of the reasons, I think, why Samsung will recover from this. I think it’s difficult to find another Android-powered phone as good as the Galaxy S7 series. They’re beautiful, incredibly powerful, and packing the best displays and cameras you’ll find in a phone. They also offer features like water-resistance and wireless charging.
So long as Samsung continues to make devices that look and perform better than the competition, fans will look beyond the Note 7 debacle. Why settle for a lesser device just because Samsung made a mistake with one phone?
I do think that rushing the Note 7 to market may have been one of the reasons why it had problems. Samsung does seem to have become obsessed with launching the Note series before Apple unveils its latest iPhones. But a recent report claims the company will focus on just one flagship phone next year to ensure quality doesn’t take a hit.
Galaxy phones may not be quite as iconic as the iPhone, but they have fans that are just as dedicated. If a similar issue plagued the iPhone 7, do you think it would prevent people from buying the iPhone 8? Of course not.
Just wait until Samsung announces the Galaxy S8 next year. I’m willing to bet it will still be its most successful smartphone ever, and that the company will struggle to keep up with initial demand. As long as that’s not explosive, Samsung will be fine.
Luke: I disagree about customer loyalty, which to me explains the response to that survey I mentioned above — showing that more people would jump to a rival smartphone than to one made by the same company that’s been shown not to have that same explosive, err, feature.
Samsung may make nicer smartphones than it did in the early days, but it’s always been criticized for lacking the care and attention-to-detail that Apple has. I’m sure you remember a year or so back when it was pointed out that, unlike the iPhone, on Samsung’s phones the ports, microphones, speakers, jacks, and other elements don’t line up — giving it a lazy look-and-feel as though proper care and attention wasn’t paid to it.
At the time, a number of Android fans argued with me when I suggested it was significant. It may not be a big detail but, like the classic story about Van Halen not wanting brown M&Ms in their dressing room, it’s shorthand for showing that proper attention to detail is being paid. The Note 7 looks a whole lot like that scenario taken to its logical conclusion.
It’s fine if you’ll be rushing out to buy the Note 8 the day it’s announced — but you’re also the guy who made a list here on Cult of Mac of “6 amazing features Apple must steal from Galaxy Note 7.” Then the phones started catching fire and you went strangely quiet.
You’re right in saying that if this happens again it will be even more damaging, but once is enough to have a detrimental effect on a brand that most people have traditionally bought because it’s affordable.
Killian: Well, I think one of the reasons why some users are jumping ship, and according to Samsung it’s nowhere near as much as 26 percent, is the timing of it all. The recall happened just as the iPhone 7 and iPhone 7 Plus went on sale, and to many, a brand new handset will have been much more attractive than the 7-month-old Galaxy S7 series.
I don’t agree that Samsung lacks care and attention when it comes to design. That’s absolute rubbish. Find me a review of the Galaxy S7 edge or the Galaxy Note 7 that complains about its design. No one cares that the ports don’t line up except iPhone fanboys who are grasping at straws, looking to pick fault.
I wrote that piece before Samsung recalled all devices, but I still believe they are features Apple should steal. And I didn’t go “strangely quiet” — I recently wrote an article (before the second recall) in which I advised readers to avoid the Note 7 and buy an iPhone 7 Plus instead.
I think that, like a lot of Apple fans, you’re blowing this way out of proportion. Sure, it’s a big issue, but it’s not going to kill Samsung’s brand. Apple survived Antennagate, Bendgate, and plenty of other fiascos — and Samsung will survive this.
Anyway, I think we’ve both made our points, so let’s hand this over to the readers now. Do you think Samsung can recover from its Note 7 disaster, or do you think this will have a long-term impact on the success of its smartphone business?
Friday Night Fights is a series of weekly death matches between two no-mercy brawlers who will fight to the death — or at least agree to disagree — about which is better: Apple or Google, iOS or Android?