So eventually Samsung permanently discontinues production and sales of the Galaxy Note 7 smartphone, owing to safety fears over defective batteries — including in replacement handsets that it had subsequently sent to customers following a recall of the original devices.
The company did not provide any additional statement explaining its decision but in a filing about ending production with South Korean regulators, it cites ‘customer safety’ as the reason. The news was reported earlier by the WSJ, and a spokeswomen for Samsung confirmed it is ending production of the model.
Yesterday, 12th October, Samsung had asked carriers and resellers to halt sales and exchanges of the Note 7 devices, as reports of problems with replacement handsets mounted. Note 7 owners have been offered a full refund or a refund for a different Samsung smartphone, along with a $25 gift certificate or other add-on to sweeten the hassle of dealing with two rounds of recalls.
The initial recall of the circa 2.5 million Note 7s in circulation was announced in early September. The company had previously said it was adjusting production of the Note 7 as in “take further steps to ensure quality and safety matters”. However, in the event, and given the mounting PR nightmare of even replacement Note 7s it’s hardly a surprise Samsung has decided to pull the plug and put the brand out of its misery.
Aside from the damage to Samsung’s Galaxy brand of being associated with exploding batteries, the cost of withdrawing the Note 7 will not come cheap. Reuters cites analysts estimating that a permanent end to Note 7 sales could cost the company up to $17 billion. Yes, b for billion, that’s how much one device flaw can hurt a company of that size. Including the confidence hurt that it has unleashed to the mass.
Meanwhile, the company’s stock price has also taken a substantial hit on the news of the Note 7’s nixing: falling by 8 per cent today, its biggest percentage decline since October 2008, as investors wiped some $19 billion off the value of the company.