Channel Partners: Samsung Will Recover From Galaxy Note7 Halt, Citing History Of HP, Dell Battery Fires
Joseph F. Kovar
Samsung on Tuesday officially said it would stop production of its Galaxy Note7 smartphone after several reported incidents where the phone, and even some of the replacement units the company sent out, began smoking or catching fire.
"For the benefit of consumers' safety, we stopped sales and exchanges of the Galaxy Note7 and have consequently decided to stop production," a Samsung spokesperson wrote in an email to CRN.
The production halt gives competitors like Apple or the newly-released Google Pixel an opportunity to rack up extra sales.
However, channel partners, recalling earlier episodes of mobile PCs smoking or burning, expect Samsung to recover eventually.
[Related: Reports: Samsung Stops Production Of Galaxy Note 7]
Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, which was recently authorized as a Samsung Galaxy smartphone partner, said he is confident that Samsung will bounce back stronger than ever.
"This is definitely going to have a large impact on Samsung's dominant smartphone market share," Venero told CRN. "But this is a $235 billion company that has proven that it can bounce back from adversity and continue to deliver products and provide great support with its partners in the markets they compete in."
The Samsung Galaxy Note7 was unveiled in early August to much fanfare as the company's newest weapon in its war of mobile device domination with arch-rival Apple. Shipments started August 19.
However, Samsung on September 2 halted sales of the Galaxy Note7, citing a battery issue as the reason several units caught fire. Some airlines banned users from activating a Samsung Galaxy Note7 on their flights.
The U.S. Consumer Product Safety Commission on September 15 issued an official recall notice on all Note7 devices sold before that date because "the lithium-ion battery in the Galaxy Note7 smartphones can overheat and catch fire, posing a serious burn hazard to consumers."
At the time, the U.S. Consumer Product Safety Commission said Samsung had received 92 reports of overheating batteries in the U.S. which led to 26 reports of burns and 55 reports of property damage.
But reports surfaced Monday that Samsung halted production of the Galaxy Note7 after some units sent to customers to replace their recalled devices also caused fires.
The Wall Street Journal and other media outlets on Tuesday reported that Samsung has decided to discontinue production of the Galaxy Note7 permanently. The Journal reported that Samsung's potential losses related to the recall and production halt could be as high as $2.8 billion in the last calendar quarter of 2016.
Despite the recall, as of Tuesday afternoon, versions of the Galaxy Note7 mobile phone for AT&T, Verizon, Sprint, T-Mobile, US Cellular, and C Spire were still available on the Samsung website for sale in the U.S.
However, the site also includes a page titled "Latest Updates on the Galaxy Note7" in which it says the company is working with the U.S. Consumer Product Safety Commission on the issue, and explained how consumers can determine if their device was recalled and what steps to take.
Solution providers took the recall and production halt in stride and said they expect Samsung to recover.
Future Tech's Venero said Samsung is one of the few companies that could recover from such a misstep. "Samsung will recover and come back stronger than ever with a product that will not only address the previous challenges but also deliver the technology leadership that they have always shown in their flagship devices," he said.
Samsung's decision to shut down Galaxy Note 7 production altogether is a sign of the company's fortitude to stand up and do the right thing, Venero said. "Samsung is saying that it is not going to tweak the phone, but rather is shutting down production because it is not a good product right now," he said. "The most successful companies in the world are the companies that have failed and then take that failure and turn it into great success."
Future Tech, for its part, does not have any Galaxy Note 7s currently in its customer base, said Venero. Furthermore, he said, Future Tech always test devices before rolling out to protect end-user customers from "quality challenges in the field."
"The most successful people in the world are the people that have failed the most," Venero added. "That means you are trying. Not everything is going to be a home run. When you strike out, you have to get up to the plate and take your swings so you can hit another home run."
Chris Case, president of Sequel Data Systems, an Austin, Texas-based solution provider that deals with mobile devices from vendors other than Samsung, said every manufacturer at some point has issues.
Case told CRN that both Dell and Hewlett Packard Inc. have both had to recall mobile PCs because of battery problems, but have recovered. "We had one HP customer whose laptop caught fire," he said. "HP replaced it. The customer is still a loyal customer. Dell has done the same. Not once did I ever hear a Dell customer say they will never buy a Dell because of the battery."
Case said he is not sure customers will really think much about the recall and production halt. "If you are an Android user, you have other choices," he said. "Samsung will recover unless every product it manufacturers has an issue."
Additional reporting by Steve Burke.