UK, October 11, 2016.- The vast majority of citizens took up a smartphone. No matter what brand, the manufacturer, the latest model, the latest innovation. It matters more what is done with a device connected to the Internet permanently. Undoubtedly, one of the great advances of mankind in the last 25 years. However, manufacturers of Smartphones have embarked on a mad race to produce the world’s best selling mobile. The great rivalry between iOS (Apple) and Android (Google) leads to other manufacturers to try to create amazing devices. The crisis of Samsung Galaxy Note 7 is a proof of this crazy race. I quote here an interesting report from the British news agencies, Reuters:
Samsung Electronics Co Ltd (005930.KS) scrapped its flagship Galaxy Note 7 smartphone on Tuesday less than two months after its launch, dealing a huge blow to its reputation and outlook after failing to resolve safety concerns. Samsung announced the recall of 2.5 million Note 7s in early September following numerous reports of the phones catching fire and on Tuesday it finally pulled the plug on the $882 device in what could be one of the costliest product safety failures in tech history. The decision to scrap the Note 7 came after fresh reports of fires in replacement devices prompted new warnings from regulators, phone carriers and airlines. “(We) have decided to halt production and sales of the Galaxy Note 7 in order to consider our consumers’ safety first and foremost,” the South Korean firm said in a filing to the Seoul stock exchange. Samsung said earlier it asked all global carriers to stop sales of the Note 7s and the exchange of original devices for replacements, while it worked with regulators to investigate the problem. The company is offering to exchange Note 7s for other products or refund them. Samsung’s decision to pull Note 7s off the shelves not only raises fresh doubts about the firm’s quality control but could result in huge financial and reputational costs. Analysts say a permanent end to Note 7 sales could cost Samsung up to $17 billion and tarnish its other phone products in the minds of consumers and carriers. Investors wiped nearly $20 billion off Samsung Electronics’ market value on Tuesday as its shares closed down 8 percent, their biggest daily percentage decline since 2008. “This is the first time that I have seen a product recall go this badly wrong,” financial analyst Richard Windsor said in a note to clients. “When it comes to the damage that it will do to Samsung’s brand, we are in uncharted territory”. The premium device, launched in August, was supposed to compete with Apple Inc’s (AAPL.O) latest iPhone for supremacy in the smartphone market. Well received by critics, its first problem was a shortage as pre-orders overwhelmed supply. But within days of the launch images of charred Note 7s began appearing on social media, in the first sign that something was seriously amiss with the gadget.
Obviously running a business corporation like Samsung is a work of great professional, very talented and the best resources. Surely, Samsung achieved in a few months will clean up their image and reputation, despite the high economic cost of this operation will involve.
Perhaps these crises can be avoided if the focus of your business model is placed on the customer, the consumer of your products and services.