Samsung’s Note 7 recall should tell companies how high the stakes are with product/safety-testing
One of the big problems with tech biz is that sometimes companies tend to oversell their latest. While Samsung was no different, much flak has come the Korean giant’s way after buyers complained of issue with the battery of its latest top-end smartphone, the Galaxy Note 7. The Note 7, with iris scanner technology and touted to be completely waterproof had been launched amidst great fanfare and was promoted by the company as everything a phone could be and more. But, of late, the one feature that has generated the most buzz is a Note 7 handsets catching fire because of their batteries overheating. Though only 35 of the 2.5 million phones have caught fire so far, each incident, in the days of viral social media content, has created a PR nightmare for the company that is yet to launch the phone in most markets. This has also put paid to its efforts to outsell its competitor Apple which is due to launch its iPhone7 this week.
While the recall gimmick may just work for the company, it will set a precedent for others in the business to do the same in case of faulty technology. For Samsung, $1.5 billion—according to Credit Suisse estimates, the company gets about $600 of revenue and $108 of operating profit for every Note 7 it sells—may be a small price to pay if it can even garner a million more customers on the back of its bona fide recall. While the move is not expected to deter companies from using lithium batteries until a better technology breaks through, it will certainly be a lesson for companies conducting rigourous safety-tests before a product hits the market. If the global top-seller of smartphones is ready to take a $1.5-billion gamble for saving its reputation, companies across segments must pay greater attention to how they see safety and product testing.