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Why Samsung exploded and how it can turn itself around

Daniel Howley
Technology Editor

Samsung’s Galaxy Note7 was released to rave reviews when it hit the market in August. Unfortunately, the smartphone came with a previously undisclosed feature: the ability to explode into flames without warning.

After the company investigated its flaming phones, it issued a recall and offered replacement devices to its customers, as well as the option to simply get a refund. Then came reports that the company’s replacement Note7s were also catching fire. So, yeah, you could say Samsung is having a rough few months.

In response to the most recent reports of Note7 fires, Samsung completely halted production of its ill-fated smartphone and issued a recall for all Note7s still in consumers’ hands.

With the company effectively killing off the Note7, the discussion now turns to what Samsung can do to limit the damage its exploding phone has done and will do to its smartphone division and brand overall. Unfortunately for Samsung, that may be more difficult than it sounds.

Done in by excess?

The Note7 was supposed to be one of the most impressive smartphones Samsung ever created. It featured a high-tech iris scanner, powerful performance, an impressive camera and an enormous battery with fast-charging technology.

But according to Georgetown University’s assistant professor of operations and information management, John Cui, Samsung may have flown too close to the sun with the Note7 and burned itself in the process.

Cui, an expert in supply chain and global production trends, says the Samsung may have rushed the 5.7-inch Note7 to market to ensure its availability before Apple unveiled its 5.5-inch iPhone 7 Plus.

Samsung really wanted an innovative product in this case — they went from Note 5 directly to Note 7, it has slim battery and curved contours, etc. — and also prioritized speed-to-market to launch the product before iPhone 7 Plus, but overlooked robustness checks,” Cui explained via email.

“There are trade-offs between these three.  For a radical, innovative product, it takes time to build and it takes even longer to test it.  If Samsung launched [a] more basic version, like Note 6, they would have been fine.”

Killing the Note

Samsung’s original Galaxy Note was one of the first big-screen smartphones to hit the market when it launched in 2011. Since then the handset has grown to become Samsung’s second most important mobile product behind its flagship Galaxy S series. It’s also the Samsung phone designed specifically to go toe-to-toe with Apple’s big-screen iPhone 7 Plus. The Note has traditionally been the phone that Samsung outfits with its newest technologies before bringing them to the Galaxy S series.

To say the Note is important to the company, then, is an understatement. But with the Note7’s name tarnished beyond repair, and every commercial airline in the US warning customers to turn off the handset when they board their planes, it might be time for Samsung to simply kill off the Note brand entirely.

According to market research firm Gartner Inc.’s Tuong Nguyen, instead of sticking with the Note name, Samsung could extend the S series brand and, “call it a ‘Plus’ version, or something like that, or have a different brand all together … for the next release,” Nguyen said.

Obviously, Samsung has to do something to assure customers its other handsets are safe. However, as Nguyen points out, there aren’t very many elegant solutions to such a situation. Sure, the company could produce an ad explaining the situation, but that may end up doing more harm than good.

The Note7 isn’t an end-all, be-all Samsung product, explained William Stofega, program director for IDC Research’s Mobile Device, Technology and Trends division. “They need to contain any damage from the Note7 and make sure it doesn’t dribble down to their other products,” he said.

Apple’s gain?

With the Note7 officially out of the picture, the question now becomes: Which company will benefit from Samsung’s loss? The immediate answer many industry observers have jumped to is Apple, and why not? The companies are the best known smartphone makers around and direct competitors of Samsung.

And, sure, some Note7 owners may decide to ditch Android entirely for Apple’s iOS. But the company that could truly end up benefiting from Samsung’s Note7 debacle is Google.

That’s because the tech giant, which debuted its new premium 5-inch Pixel and 5.5-inch Pixel XL, would still give consumers the option of purchasing a big-screen smartphone without having to leave Google’s Android operating system. And considering how annoying it can be to migrate from one company’s’ ecosystem to another, sticking with Google might just be the easier prospect.

But as Stofega explains, it’s unwise to count Samsung out of the smartphone market entirely.

“Samsung is a company that doesn’t give up easily,” he said. “They’ve managed to go from zero to 100 miles per hour in the smartphone market and by taking advantage of Android they came to dominate the market. That is something that should be taken into mind when thinking about their overall products.”

Samsung isn’t the first company to deal with recall issues, either. Dell laptop batteries caught fire at one point resulting in a recall, while Apple had to recall its MacBook chargers in the UK due to risk of electric shock, and neither company has closed up shop.

So while there’s no doubt the Note7 is an absolute mess for Samsung, it may be able to turn its fortunes around sooner than you think.

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Email Daniel at dhowley@yahoo-inc.com; follow him on Twitter at @DanielHowley.