Troublesome probably doesn’t even begin to cover Samsung’s September. Between its Galaxy Note 7 smartphones exploding all over the world and the corresponding fallout, which resulted in Billions of dollars in damage as the company attempted — and is still attempting to recover and replace every Note 7 with the potential to turn into a firecracker — has been one of the most serious screw ups in contemporary smartphone history. And guess what? A report which has surfaced recently, points to Samsung’s rivalry with Apple as the chief reason behind this fiasco.
According to a Bloomberg report, Apple’s iPhone 7 was actually what pushed Samsung over the edge and into a rush to get its Note 7 devices on shelfs as soon as possible. After reports that the iPhone 7 wouldn’t be eye-popping and will be quite similar to its predecessors, managers at Samsung Inc. decided that there was no time to launch the Note 7 like the present.
Sound Logic, Wrong Implementation:
The logic was certainly sound. Provide the public with a device that could take upon and perhaps even outmaneuver Apple’s iPhone 7 and voila! A golden chance to grab some market share from Apple and disrupt its iPhone 7 launch at the same time– which is probably what every top-level Samsung executive dreams about. However, the device that Samsung would have to put up against the iPhone 7 needed to be feature loaded, in order to ensure that it would be able to make any sort of a dent in Apple’s sales volume.
The Galaxy Note 7 was a viable option. With edge to edge displays, exemplary processing powers and a huge battery — not to mention the Galaxy Note series legacy — it was the perfect candidate against Apple’s relatively subdued offering. However, it wasn’t quite ready yet. Well, Samsung wasn’t going to let such a tiny thing stand between it and the chance to score one point over Apple. The company finally managed to launch the Note 7 in August itself by pushing its suppliers to meet tighter deadlines and rushing the whole process. For a time, everything looked to be going in Samsung’s favor.
However, that is when things started to go horribly wrong. A few days after Samsung introduced the Note 7 devices, reports of explosion surface. First, there were a couple of scattered reports and everyone thought it was an anomaly. Before many days were out though, dozens of reports started rolling in from all over the world. Finally, Samsung’s head of mobile, D.J.Koh held a pres conference in which he made a tragic and heartbreaking (For Smasung) announcement — The company would replace all of the 2.5 million devices it had managed to sell so far.
Management Troubles And Confused Response:
The trouble comes at a very bad time for Samsung. Lee Kun-Hee, the Samsung chairman, suffered a heart attack back in 2014 and hasn’t come back to take the reins of the business yet. While his son Jay Y. Lee has joined the board, neither does he hold his father’s position — due to Korean customs, which forbid a son from taking his father’s place while the latter is alive — nor does he wield his authority within the company — leaving no clear leader to make snappy decisions and quickly take Samsung past its troubled times.
The end result was that even after reports of exploding Note 7 devices started rolling in from all quarters of the world, no concrete decision was made. The company first told users to stop using the device, then told that it was going to update the software to keep it from charging to full capacity. Finally, Samsung said that it will be replacing all the devices– leading to mass confusion about what was to be done about the matter.
There have been various reports about why the Note 7 explodes. However, from what we have been able to gauge about the matter, the blasts are being caused due to the fact that Samsung decided to provide the Note 7 with a 3500 milliampere hour battery compared with 3000 mAh for the previous model, without proper preparation and forethought. The iPhone 7 Plus comes with a 2,900 mAh battery and considering that iOS devices are generally more efficient than Android, Samsung probably thought that a 3,500 mAh battery would be the better option and perhaps look better on the spec sheet.
Hurried Manufacturing, Short Circuits:
However, after the Note 7 devices started turning into little fireballs and an investigation into the matter was launched, it was discovered that there was an error in production that put pressure on plates within the battery cells. The pressure brought negative and positive poles into contact — which as anyone with a basic knowledge of electricity can tell — is not a smart thing to do. The contact triggered excessive heat that then caused the battery to explode.
The U.S. Consumer Product Safety Commission reached somewhat similar results. According to them, the battery was too big of its compartment and while Samsung managed to squeeze it in, the pressure it had to deal with inside cause short-circuits, leading to explosions.
Well, after bouts and rounds of finger pointing, a decision to replace all the Note 7 devices was reached. Samsung has also decided to include batteries from other suppliers rather than the SDI affiliate, which had previously been supplying batteries for the Note 7, and in which Samsung owns a 20 percent stakes. Instead, the company is reportedly purchasing batteries for the replacement Note 7 from Amperex Technology Ltd, a unit of Japan’s TDK Corp.
As per a statement from the company,
After extensive testing and as reported to multiple regulatory agencies, this issue is isolated to the battery cell from one supplier only. All replacement Galaxy Note 7 devices will have batteries from other suppliers.
Meanwhile, the company will apparently suffer from a financial loss of around $2 Billion. The company sold its stakes in ASML Holding NV, Seagate Technology Plc, Rambus Inc. and Sharp Corp. for a total of around $891 million. However, the greater loss by far has been affected to Samsung’s hard earned reputation. The company had a legacy of quality products, a legacy which began when Chairman Lee burned thousand of faulty mobile phones, telling employees to never compromise on the product quality.
Samsung has taken a hard blow to be sure and the company’s reputation has suffered a severe loss. However, now it is time to reflect and to go into damage recovery mode. By ensuring that the faulty devices are returned as early and as painlessly as possible, Samsung will give customers the impression that for it, they come first.
Meanwhile, this should also serve as a hard-learned and extremely expensive lesson to the South Korean company, that even in an industry as competitive as smartphones, its better to focus on your own products first, rather than making changes that are influenced by what your rivals are doing.