Published : Oct. 11, 2016 - 11:07
[THE INVESTOR] No one anticipated events would unravel this way for Samsung Electronics and its flagship Galaxy Note 7. Expectations were quite high on the top-notch product, and the South Korean tech giant believed it would be able to claim the top spot in the premium smartphone sector this year, outpacing its archrival Apple.
Soon after the release of the Note 7 in August, however,
Samsung Electronics had to eat humble pie as it was inundated with reports of fires and explosions of the handset around the globe.
Many pointed out the problem-ridden smartphone is the result of Samsung’s hasty move to outrun its rivals.
Skipping the Note 6 to christen this year’s Note model with the number 7, widely perceived as a magic number that brings you luck, the tech giant advanced the release date of the model by a month from its regular release schedule in September.
It also bent over backward to impress consumers by packing in top-of-the-line technologies in an ultra-slim uni-body smartphone, which presumably caused overheating of the handset.
Samsung fumbled once again by failing to identify and solve the exact problem of the faulty Note 7, fanning the flames of what was initially thought to be just a battery issue.
Apologizing for the recent controversy surrounding the Note 7, the firm said that it has decided to halt the sales of the handset and that it would soon announce further follow-up measures to clear things up.
“Because consumers’ safety remains our top priority, we will ask all carriers and retail partners globally to stop sales and exchange of the Galaxy Note7 during the investigation,” Samsung said in a statement.
“We are working with relevant regulatory bodies to investigate the recently reported cases involving the Galaxy Note7.”
The debacle of the smartphone will surely have significant ramifications across the tech industry, affecting the tech firm’s partners.
Some of the suppliers, including Amotech, Hansol Technics and Kolen, saw their shares drop nearly 30 percent in the past month.
Following Samsung’s decision to temporarily halt the Note 7 sales, the suppliers will have to stop operating their businesses.
“If Samsung decides to completely cease production of the Note 7, it could deal a serious blow to its partners,” said an official from one of its parts suppliers.
Korean mobile carriers have also stopped selling the smartphone following Samsung’s decision, which would undermine their profits in the rest of this year.
The Note 7 was previously expected to become a shot in the arm for the local mobile carriers, suffering from the highly saturated market and sluggish demand.
Samsung’s shares dropped 5 percent to 1,596,000 won (US$1439.6) in early morning trading in light of the latest announcement on the Note 7 sales suspension.
“The profits of Samsung’s mobile business in the October-December period could drop below that of the third quarter,” said Lee Seung-woo, an analyst from IBK Securities.
“At the moment, it is hard to measure the negative impact of the Note 7 incident on the firm’s smartphone business and brand value,” he added.
By Kim Young-won (
wone0102@heraldcorp.com)