Samsung runs into some bad luck with exploding batteries in its Galaxy Note 7 smartphones. Share prices plummeted as Samsung requested that users turn off their phones as soon as possible. Some serious damage control will be required for Samsung to reverse the effect on its brand and for consumers not to jump ship in favor of rival Apple.
Talk about a shot out of the blue. Samsung Galaxy Note 7 users will have to do without their phones for a while unless they want to risk a handset exploding in their back pocket — or worse, next to their ear. It’s a bad situation for a public that simply cannot function without their phones. It’s also poor timing because the news coincides with Apple’s iPhone 7 and iPhone 7 Plus launch and is bound to cause some Samsung users to jump ship.
Fortune reported that Samsung shares fell today (Sept. 12) to their lowest level in nearly two months after consumers were told to switch off and return their new Galaxy Note 7 smartphones.
Exploding batteries are the problem, and according to Fortune, warnings were issued from airlines and regulators worldwide. Having initially been heralded as the best smartphone ever, the Galaxy Note 7 could now be remembered as the biggest lemon ever and a huge stain on Samsung’s reputation.
Samsung’s market cap has dropped by over $14.3 billion, and a weak Q4 is predicted, not surprisingly. The ongoing recall that began on Sept. 2 is sure to damage Samsung’s brand image and its sales going into the holiday season.
All Galaxy Note 7 users were advised to turn off their phones on Saturday and return them immediately as part of a voluntary recall initiated on Sept. 2. And compounding customer frustration will be that the company’s rate of replacement will depend on “local availability.” The exchange program in the U.K. will not start until Sept. 19 and, in Australia, until Sept. 21.
U.S. users are slightly luckier and may be able to get a Samsung Galaxy S7 or S7 edge from their provider, and the price difference will be refunded. Samsung is also offering a $25 gift card, in-store credit or bill credit from certain carriers.
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