On Friday Samsung Electronics stated that the termination of the Galaxy Note 7 will cost the company about $3 billion during the current and next quarters. This will bring the total cost of the recall to at least $5.3 billion.
The termination of the Galaxy Note 7 will cost somewhere in the mid-2-trillion range during October – December. During the January – March quarter the cost will be an estimated 1 trillion won (Korean Currency) or $884 million.
Earlier this week Samsung had already slashed their third-quarter profit forecast by $2.6 billion. This has the potential to wipe out their entire smartphone business profit. The cost of Samsung’s first recall isn’t included in that, analysts estimated the cost of the first recall to be somewhere between 1 – 2 trillion won.
Samsung is a big company that has more than enough money to deal with the setback from the phone recall. Samsung said that they expect to generate $4.6 billion in operating income during the third quarter after the cost of the recall. Analysts stated that most of the income will be generated by semiconductors and the sale of advanced displays.
After the Galaxy Note 7 recall, Samsung stated that they will make some significant changes in their quality assurance process to enhance product safety for consumers.
The company also stated that they will expand sales of the two other smartphones which were released in Spring 2016. The Galaxy S7 and Galaxy S7 Edge, that statement squashed rumors that Samsung was planning to release updated versions of those devices in the Spring of 2017.
Samsung has a history of releasing a new phone in the Galaxy S series in Spring of every year. The Galaxy phones are great, however, Samsung may have to lower the price of the 7-month-old phones to entice people to continue buying them.
As a result of the overheating problems and unexplained fires, more than 2.5 million Galaxy Note 7 phones were recalled before the product was terminated earlier this week. This occurred only two months after the phone was launched in August.
In the United States, 1.9 million Galaxy Note 7 phones were recalled. In China, 200,000 phones were recalled and roughly half million phones were recalled in South Korea.
The U.S. Consumer Product Safety Commission stated that there were 96 reports of batteries in the Galaxy Note 7 overheating in the country. The Commission received 13 reports of burns and 47 reports of property damages that were linked to the exploding phones.
After these events took place Samsung released the following statement: “Consumers should immediately stop using and power down all Galaxy Note 7 devices, including Note 7 devices received as replacements in the previous recall.”
The recall of the Galaxy Note 7 was not dealt with appropriately on Samsung’s part. Samsung initially stated that the problems occurred as a result of a manufacturing error in the batteries. However, the problem with the replacements is still unclear.
Experts say that Samsung may have incorrectly diagnosed the problem because they didn’t do a thorough investigation. It may have taken a long time to determine the real cause of this issue. In an attempt to keep the good will of their customers Samsung is giving an incentive of $100 credit to Note 7 owners who switch to another Samsung phone.
I really liked the Galaxy Note 7 phone, this was one of the most expensive smartphones with all the latest features and functionalities that anyone could have wanted. The Galaxy Note 7 will be dearly missed the price varied between $850 and $890.