The Note 7 is lit. Unfortunately not in a good way — for Samsung anyway. The news of exploding phones has spread from a few tech related reports, to dramatic news stories in main stream media. Samsung have finally admitted defeat and cancelled further production and sale of the Galaxy Note 7. Many have questioned what the next move will be? Well, Samsung really have three options really.
Drop the Note series
What once started as an experiement to see if business customers would purchase something akin to their old PDA has grown into a huge market for Samsung. Users purchased units in their millions, with the Note 7 selling around 2.5million units according to HMC investments analysis. However, dropping the Note series completely is not as stupid as it might first seem.
Without a doubt there will be many users that will miss the S pen, but many users bought previous versions just for the large screen size. When Samsung already produces the Galaxy S7 edge with a 5.5 inch (only 0.2 inch smaller than the Note 7) screen do they really need to provide a Note series as well?
Samsung have already considered droppping the S Pen equppied unit, choosing not to launch the Note 5 in Europe at all because it claimed users didn’t really use it. When Phone Arena polled its readers for S Pen usage with Note users it found only 22.35% used it all the time, 30.94% say they’ve used it once or twice, and 46.71% say they only occasionally make use of it.
So suddenly removing the Note line doesnt seem so much of a detrimental move for Samsung. Cutting out research and development costs for a risk of loosing a maximum of 558,750 sales (22.35% of 2.5 million sales). A small price to pay on general sales trends. Although Smasung are not on the same levels as 2014, they still sell more than 70million units a quarter and make more than 16% of the profit found in the smartphone market largely dominated by Apple.
Overspill estimated profit per phone
Carry on regardless
This is the knee-jerk reaction of a company that wants to be the world leader. Launching profit warnings due to the $4billion costs of the recall is some of the worst news you could have, the share holders need something to cling onto. Coming back with something bigger and better than ever to recoup some of the costs is the best thing to do right?
Unfortunately, R&D costs of developing another handset to follow the doomed version is no cheap and easy task. Is that cost really worth it when it would be forever known as the successor to the version that blew up? Only Samsung executives can really make that call. Unfortunately, the Note brand may forever be tarnished with the fear of exploding batteries. Ask any OEM of 2015 hottest gadget the ‘hoverboard’ what some exploding products can do to your market.
Call it something else
This is an extension of the carry on regardless angle, still produce the Note style handset but call it something different. I have long predicted a move where the Note handset is just a version of the Galaxy S line. So you have a line that looks like this — Galaxy Sx, Galaxy Sx Edge, Galaxy Sx Mini, Galaxy Sx Note. Users are unlikely to be fooled but it avoids some of the stigma.
There’s another ‘unfortunately’ here though, as the fallout from exploding phones, seems to have damaged Samsung’s brand overall and not just the Note line. YouGov reports that perception of the entire Samsung brand has ‘tumbled’ since their Notes started catching fire.
So Samsung may see much more fallout from just one of their products than they ever could have predicted. This is never more illustrated by the fact that any exploding phone now seems to be blamed on the Note line, and sometimes it isn’t even their phones!
The worry would be that brand deterioration affects even Samsungs cornerstone Galaxy S launch that is only a few months away. This might sound crazy that every Samsung phone would feel the effects, but the vast majority of jokes seen in media have been related to ‘Samsung smartphones‘ an not the Note 7 specifically. Could Samsung be forever fighting to overturn this huge dent in their market share? Apple always seem to recover from their launch disaster, can Samsung do the same? What do you think their choice will be? Let us know in the comments below.