Product recalls are relatively common but it is rare that any product is scrapped altogether. For the Korean technology giant Samsung, the decision to scrap the manufacture of its flagship Galaxy Note 7 smartphone is extraordinary. When the new phone arrived in the summer, it was hailed as a worthy challenger to Apple, whose iPhones lead the high end of the smartphone market.
But by last month it was evident that the new Samsung product had a serious problem. The battery was overheating and catching fire. The US Federal Aviation Authority took the unusual step of banning the phone from aircraft after one exploded on an internal flight. The Korean company recalled no less than 2.5 million Galaxy Note 7s for a battery change. Thus far, the story was not exceptional. An early iPhone had had a similar problem which Apple, embarrassed by its initial denial of the issue, managed to sort out. But Samsung’s battery troubles were not fixed. One of the replacements it sent out also caught fire on another US flight. Until yesterday the firm insisted that it was still working on a solution, but then top management decreed production of the new Galaxy model would cease altogether.
Scrapping the phone will cost Samsung dearly both in financial and reputational terms. And the Korean finance ministry has also warned this will have a significant impact on the country’s export earnings. This technology disaster seems set to become a standard study case for MBA students for years to come.
Precisely what went wrong in the research and development that created the Galaxy Note 7 has yet to be revealed, but why this corporate disaster came about is already clear. High technology firms are in a constant competitive battle to sell new products. Sometimes these devices are completely new - the smartphone and the tablet, both pioneered by Apple, are prime examples. But often the new offerings are merely upgrades of existing hardware and software, dressed up with marketing ballyhoo to persuade consumers to buy these new “must-haves". The reality is that smartphones made even some years ago are still perfectly serviceable. They can allow their owners to check news, email and social media, surf the web, watch films, listen to music, send and receive text messages, tell the time and also, of course, make phone calls.
The two new frontiers for smartphone makers are artificial intelligence and battery life. The former is about being able to speak to your phone and have it respond with answers based not only on the split-second scouring of vast data banks but also on a steadily increasing understanding of its owners habits and interests. Such a capacity is ultimately likely to tie customers to a manufacturer because of the highly personalized data that has been amassed about them.
Battery life remains the big challenge. Heavy use of a smartphone means it will need recharging before the day is out. Samsung’s Galaxy Note 7 battery was not particularly longer lasting than others, but the phone was selling on its style and features. For effectively “old” battery technology to go haywire and worse, be unfixable, is puzzling. It is also a useful lesson for eager early-adopters who will queue overnight to buy the very latest gizmo. There is little to be lost by waiting a few months to see if the things actually work.
