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The Note 7 Fiasco: a Saga of Samsung's Disgrace

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The Note 7 Fiasco: a Saga of Samsung's Disgrace THE NOTE 7 FIASCO: A SAGA OF SAMSUNG’S DISGRACE Mansi Arora Madan Assistant Professor, Jagan Institute of Management Studies, Research Scholar, Aligarh Muslim University, Aligarh [Post Graduate in Marketing with Business management Graduation from Panjab University Chandigarh, the author has worked in the field of Public Relations and Advertising for Brands like Reckitt Beckinser, ISB Hyderabad. After clearing UGC-NET in Management she has over 7 years of experience in teaching Marketing, Operations and HR subjects. She has taken a few management development workshops for middle level Managers in written communication, leadership skills and has also been holding the editorial Post for in house Publications at Jagan Institute of Management studies. Recently she was in the Peer Review Panel for Reviewing papers for an International Conference in Japan. With about 12 Research Papers to her credit presented at varied National and International conferences, she is now pursuing her PhD in strategic Management with Aligarh Muslim University.] Like every day morning, I got up to prepare my morning tea and went to my front balcony to pick up my morning dose of news. The morning was usual until I read “The death of Samsung Galaxy Note 7”. I was thwarted as my husband had pre-booked the phone, as a gift for our 6th wedding anniversary. Although, the rumours were prevalent about the problems in Note7, but like every Indian, I had preferred to stay hopeful until last. The article in Indian Express read: I. THE DEATH OF SAMSUNG GALAXY NOTE 7 Samsung Galaxy Note 7, part of the company‟s flagship Note series that made big-screen phones popular, is now dead. Production for the phone, long considered one of the best Android devices in the market, has ended.When did this crisis start? Samsung Galaxy Note 7 was launched on August 2 and first went on sale in the US and South Korea in mid- August. The phone was supposed to be launched in India by the end of August, but that never happened.By September 2, Samsung recalled the phone, as reports emerged of Note 7 devices over-heating, catching fire and even exploding. Samsung promised it would fix the issue in newer versions of the phone. In the US, over 92 cases of Note 7 catching fire were reported.The replacement phones came with a green battery indicator to show they were safe. They went on sale by the end of September, but just a couple of days into October, the problems recurred. While they were being charged, Note 7 devices managed to burn down a jeep and a garage in two separate incidents in the US. The most serious case: A replacement Galaxy Note 7 Smartphone caught fire inside a Southwest Airlines flight from Baltimore to Louisville, US, and passengers had to be evacuated. Since 505 | P a g e then, five other cases of replacement phones catching fire in the US have been reported, besides cases in South Korea as well II. DOES SAMSUNG KNOW WHAT WENT WRONG WITH GALAXY NOTE 7? Its Note 7 appeared to have an issue with its battery. Like all premium Smartphone these days, this one also came with a non-replaceable lithium-ion battery. As has been reported recently, any fault in the manufacturing process can lead to the phone overheating, leading to fires. Samsung is also the world‟s largest manufacturer of lithium batteries. But the South-Korean firm didn‟t yet know what exactly went wrong with the phones. A report in The New York Times says Samsung engineers are still trying to figure out the problem. In the company‟s own labs they‟ve been unable to get a Galaxy Note 7 to explode. The report also says the engineers were under pressure to fix the problem. So the conclusion they hastily arrived at was that defective batteries from one particular factory caused the issue in the first case. After which, the sales resumed by theend of September, only for the problem to return. III. HOW DOES THIS AFFECT SAMSUNG? Note 7 was its new flagship device. For Samsung, 2016 started on a great note thanks to its S7 and S7 Edge, which did very well and helped the company‟s mobile division report big profits. The Note 7 was supposed to boost all of this and Samsung was expected to sell 14 million of these devices. With reports of the fires in replacement phones and news of production coming to a halt, Samsung‟s stock has taken a beating in the market. The company has lost nearly $17 billion in market share since the replacement Galaxy Note 7s started exploding. Now Samsung has cut profit estimates for its third quarter by 2.6 trillion won or nearly $2.3 billion. So yes, for Samsung, the Note 7 was an important phone, one that would have helped it continue its profits in the crucial holiday quarter. With Google launching its own premium Pixel and Pixel XL and Apple‟s iPhone 7 plus now out, Samsung has lost control of the crucial premium segment of Smartphone. For now, Samsung is working with the US Consumer Product Safety Commission (CPSC), asking all customers to power down their phones and return them. Well, the consequences didn’t end here. One Man’s loss is another man’s gain- according to an IDC survey, nearly half of the Note 7 owners in the US will choose an Apple iPhone to replace their recalled device. IV. BACKGROUND The first mobile phone which started the trend of a large screen hand held device and became widely spread as the first commercially successful “phablet” (a word concoction between “phone” and “tablet”) was none other than 2011 Samsung Galaxy Note. An obnoxiously overspec‟d and unnecessarily large device was expected to tank during those times. However, things happened otherwise. The debutant phablet pioneered the idea of making notes on phone with the ease of writing in a notebook with the help of a stylus (S-pen) and became the most successful Smartphoneline-ups till date. Note series eventually was made skinnier than each of its successor, with better features updated specs, improved display, thus unleashing a different experience of using a Smartphoneto users. While Note2 was 506 | P a g e evolutionary in 2012, Note 3 was revolutionary. The phone boasted of sophisticated overhaul feel with an exceptional camera experience. The expectations from the note series were now building up, so Samsung decided to introduce Note 4 as a complete powerhouse of its time. The device was introduced in 2014 with short lived microUSB3.0 port for faster charging and data connectivity as well as a slew of new s-pen related functions. The air command view with s-pen alone managed to elevate its attractiveness to customers. Also, by 2014 Samsung‟s dominance in smart phone world was unquestionable. Their strategy became more focused by announcing its flagship phone in the Galaxy S series during the first half of the year, while reserving the second half to the new offering from their note series. To propel the consumers more Samsung, also started to offer variants to existing series with Samsung Galaxy Note Edge-a curvy experience. While Note followers loved the new experience, most of the consumers took it as marketing gimmick of a same product.Following the receptive responses, several new changes came along with 5th generation model in 2015. Note 5 had the most premium look and feel with glass and metal construction, more responsive fingerprint sensor, heart rate sensor and an update S-pen with auto-eject mechanism. It was blessed with rapid charging in addition to wireless charging which made the consumers enjoy the wonders brought on with Note5. Well, after the wonderful series, what do we expect it to offer? With the intentions to launch nothing less than magnificent Samsung announced to skip the next generation of the galaxy note series i.e. and will jump to Note 7 to bring it in line with Galaxy S family. V. THE SAMSUNG SMARTPHONE STORY Post iPhone, the era of Smartphone began in 2008 and 2009. Samsung, along with many others was hopelessly amongst many Smartphone crowd brands. It relied mostly on the retailers push strategy to sell their devices and had to separate branding to their credit. By about 2009, Samsung decided to something to build its brand value in growing Smartphone industry. Samsung introduced a line of flagship phones designed to run android on devices with revolutionary new screen technology called Super AMOLED, that it first wanted to put in someone else‟s device. Samsung had always provided chips and displays for other manufacturers, and it wanted to license its super AMOLED tech the same way. Eventually Samsung decided to make its own hi-end Smartphone to compete with the iPhone, but didn‟t wanted to continue with “Samsung” name as it was already synonymous with cheap flip phones and really nice TVs. During those, times, Samsung was barely recognizable amongst the names like Apple, Blackberry and Nokia. So, Samsung created a luxury sub-brand for its Android smart phones called Galaxy. In March 2010, Samsung unveiled the Galaxy S, the first in what would become its successful line of Android phones and tablets. Its specifications rivalled the iPhone, for which Samsung was heavily criticised to have copied phone‟s software and physical appearance. Without being bothered by criticism, Samsung moved forward and got AT&T to agree to sell the Galaxy S, even though it was sure to be a strong rival for the iPhone. VI.THE SMART RACE Even after the success of Galaxy S, Samsung was still behind android rivals like HTC.
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