Say farewell to our flame-prone friend
After months of Galaxy Note 7’s bursting into flames, even after swapping battery suppliers and making major changes to the device’s firmware, Samsung announced yesterday that it was 
permanently calling it quits on production and sales of its flagship smartphone. A serious of crisis management failures – ranging from a slow initial response to incomprehensible communications – compounded the issue for Samsung, creating reputation damage beyond the significant amount incurred as a direct result of the phones bursting into flames or melting down while charging.
Analysts from broker Nomura have predicted that dropping the Note 7 could mean as much as $9.5 billion in lost sales alone and take $5.1 billion in profit out of Samsung’s pockets. While the word “costly” hardly does justice to the situation, when you look at how Samsung is structured putting a stop to daily damage the entire brand was incurring as a result of Note-related issues makes sense. After all, most of Samsung’s profits come from other products, not phones. And, although it was certainly a flagship device that represented what Samsung can do in the smartphone arena, the Note is not actually the main driver of profits for the company’s phone division either.
As the Note 7 is put to bed, Samsung needs to be doing all it can to prevent a similar issue from popping up in the future. Consumer confidence has absolutely been shaken, and in today’s competitive market one can’t afford to lose the trust of decision makers around the globe.
Erik Bernstein
www.bernsteincrisismanagement.com