What Lies Ahead for Samsung after the Galaxy Note 7 Recall?

Estimated reading time: 1 minute

Samsung is stopping global sales of their new Galaxy Note 7 phone, and stopping production indefinitely. A catastrophic battery cell issue has led to spontaneous combustion in a number of cases, including replacement phones sent to those affected. Samsung's October 11th statement requests that Galaxy Note 7 owners turn their smartphone off while the company continues to investigate.

Seeking to capitalize on Apple's lower impact iPhone 7 release, Samsung may have pushed for greater capabilities and faster production in the Note 7 "phablet" line. Their commercial success with older Samsung Galaxy Note devices saw the smartphone industry move to larger screen sizes en masse.

Samsung had been expecting to substantially increase its smartphone market share in 2016 led by the success of its S7 and S7 Edge phones. However, this latest development effectively kills the impact of the Note 7 phone on these figures. Samsung has grown new revenue streams in wearable technology, virtual reality and the internet of things across the last few years which add to its competitive differentiation. While its smartphone lineup stretches from the high end Galaxy 7 line to mid-range handsets, the knock-on impact of the failure of a flagship phone will be significant.

It has only been weeks since Samsung announced the recall of 2.5 million handsets - the largest ever recall in the smartphone industry at a cost of hundreds of millions of dollars. Damage control at Samsung will face an uphill battle to redeem the company'starnished image owing to the dangerous and dramatic nature of the phone's failure. Rumors suggesting that Samsung might move its release of the Galaxy S8 forward from February 2017 have been discredited.”

About Frost & Sullivan

Frost & Sullivan, the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today's market participants. For more than 50 years, we have been developing growth strategies for the global 1000, emerging businesses, the public sector and the investment community. Is your organization prepared for the next profound wave of industry convergence, disruptive technologies, increasing competitive intensity, Mega Trends, breakthrough best practices, changing customer dynamics and emerging economies?