While the recall cost has been variously estimated by third parties as up to US$17 billion, another aspect of the Note7 discontinuation is a loss of its future sales revenue and profit.
Samsung hoped to sell up to 50 million Note7s over its 12-month sales lifespan – that is about US$50 billion in revenue. As a testament to this was that it sold around 2.5-3 million during pre-sales and in the first couple of weeks before it was recalled due to fire issues.
The facts are that “some” – about .0014% according to reports – batteries caught fire during various use states – some were charging, some were off, some were in pockets or handbags, some were in use, and some identified as opportunists setting up situations to cash in on Samsung’s misfortune.
Samsung did the right thing – it extremely quickly recalled the phones, and thought it had fixed the issue with replacements that used a different battery.
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The cause of the exploding battery has not been confirmed. As iTWire has previously stated experts say it could be a perfect storm caused by: fast charge; use of third party chargers; a desire to make a thin device leading to battery design issues; an intermittent battery manufacturing defect; a battery distribution and handling issue; intermittent faults in the phone’s charging circuitry; inconsistent electronic components; or even tied to Wi-Fi or Bluetooth use.
The fact is that the sum of the parts is greater than the whole and when this complex piece of technology was assembled some caught fire.
There are dozens if not hundreds of permutations and combinations to cause the fire issue, and it is perfectly reasonable that despite rigorous testing by Samsung, its suppliers, and many global government authorities the exact causality – combination of issues - has yet to be found.
When it is I expect we will see complete transparency and I would not be surprised if the perfect storm caught other brands and models in its wake.
Meanwhile, Samsung has published a notice to shareholders that it estimates a negative impact of approximately mid-3 trillion won in operating profit from Q4, 2016 through Q1, 2017, due to the discontinuation of Galaxy Note7 sales. In AUD that is about $3.5 billion reduction in profit for the period.
The notice inferred that the Note7 will not resurface and that in the interim it will concentrate on sales of the Galaxy S7 and Edge. Additionally, it will focus on enhancing product safety by making significant changes in its quality assurance processes.
The Note7 is/was a unique niche device that will be sadly missed by some. Its larger screen and S Pen overlaid on the GS7 Edge design was a winning combination. It is now likely that we will see the Galaxy S8, Edge and possibly a Note 8 released as early as March 2017. But Samsung will need to prove its credentials and win hearts so it may delay to do something really special.
The Korean Herald has said that Samsung may drop the “flat” standard version focusing on the Edge and Edge+ (Note 8). It may also be the first to produce an almost all screen phone – a screen to body ratio approaching 100% - by incorporating the home fingerprint reader/key as an under glass sensor and the speaker/microphones in the top and bottom of the chassis.
I for one will be lining up for the Note8 – I really liked the S Pen for the two weeks I was privileged to use it.