The Galaxy Note 7 has proven to be a disaster for Samsung, thanks to its explosive performance – quite literally. And in order to replace the faulty Note 7s, Samsung will have to shell out a massive $1 billion.
Bloomberg has reported that the Note 7 recall may cost it $1 billion even as it replaces 2.5 million devices that was sold to customers. This might be the better thing for Samsung and avoid any lawsuits by being pro-active and launching their own campaign to replace all the previously sold models.
Samsung needed to do as much as they could to decrease the impact which the devices have so far caused, which could potentially tarnish the reputation of the company. The handsets were reported to spontaneously combust when charging.
Samsung is visibly depressed that this could cause a dent into the company’s revenues. But that is only a fraction of the estimated revenue projections for 2016. The Note 7 has been praised for its robust performance and functionality. It is easily the best Android device of the year. Unfortunately, the recalling issue has put the company on edge but consumers are still hopeful that their replaced handsets won’t retain the same problem.
About 35 cases of the Note 7 having caught fire due to its flaw in battery have been reported.
Understandably, Samsung has got its PR mode on and is trying to minimize the damage as much as possible. Samsung has always gained customer loyalty and has had a good rapport with the public in general, being the official sponsor for the 2016 Olympics, having offered the athletes a special edition of the Galaxy S7.
Samsung seems to be taking this incident in stride. And $1 billion in damage-repair doesn’t seem to adversely affect the company all that much. Samsung remarked that the amount to be paid for replacing the Note 7 was “heartbreaking”. Samsung’s shares were on a record high in two years, thanks to the S7, but slumped down 11 percent over the two weeks that the battery issues were reported.