The year 2016 had a very good start for Samsung. And then it all derailed, leaving an aftertaste of burnt that the giant south Korean has struggled to forget.
Until the summer, everything was for the better. After a raw of 2015 in a half-hearted, the good sales of the Galaxy S7, the latest addition to its range of smartphones premium, pulled the profits of the giant south Korean. In the second quarter, it posted its best operating performance since 2013. And the beginning of August, to top it all off, the group unveiled a new wide-format model, a top-of-range, the Galaxy Note 7. Samsung burned and the politeness of its largest competitor, Apple, including the iPhone 7 was expected in September.
Ironically, it is perhaps this willingness to take speed the firm at the apple that precipitated the exit from the road of Samsung. A few weeks after the launch of the Note 7, the first problems are starting to go back to Seoul. Several of the devices catch fire , for no apparent reason.
Breaking with the old habit of putting this kind of incident under the carpet, the leadership of Samsung has been recognized, the 2 September, that some of the batteries in its new model Galaxy Note 7, to present a risk of inflammation and activated a large recall campaign. The group is part of a public apology. “This is going to cost us so much so that I’m evil at heart “, explained the head of the mobile business of Samsung, Koh Dong-Jin.
Crisis and re-crisis
at the Beginning of September, analysts estimate that the recall and replacement of defective equipment will cost at least a billion dollars. In reality, the bill will exceed five billion dollars . Because at the beginning of October, the crisis is intensifying. Some of the smartphones replacement catch fire. The group has obviously been too quick to put its device on the market, and then too fast again estimate that only some of the batteries were at issue and that the problem could be circumscribed.
The fate of the phablet is finally sealed late in the evening of 10 October, during an emergency meeting in Seoul. “The safety of our customers is the first of our priorities, we have decided to stop the sale and production of the Galaxy Note 7 “, says Samsung, bringing to an end the greatest fiasco in its history.
as A reminder, it’s going to. Two encores, hello the damage. The 3 million devices sold, it is necessary to add an equivalent amount of stock to be destroyed. The group also agrees to indemnify its suppliers of components. And he puts up significant discounts for customers that choose to buy another device in the range returned after a Footnote 7.
The competition rubs his hands : Apple of course, and its iPhone 7 released in full during the turmoil at Samsung, but also the chinese Huawei, which is firmly installed on the third step of the podium, and Google, which announced in early October its first smartphones house, Pixel and Pixel XXL, resolutely positioned on the top of the range.
other sources of profits
Fortunately for Samsung, the range of Note accounted for about a third of the sales of high-end phones from Samsung and other models of the Korean continue to sell well. Most importantly, the phones will account for “only” half of the revenues and profits of the group. Samsung is also a giant in the field of electronic components, including memory chips NAND and DRAM, in which the request does not fail.
The South Korean it also benefits from the passage of many manufacturers of smartphones with OLED screens, of which he is the undisputed master of the technology, alongside its compatriot LG, more specialized in the larger formats. The next iPhone could be equipped with such a screen and become a big source of income for… Samsung.
But even more than its profits, it is the image of Samsung that is damaged. Difficult to forget that for months, many airlines have warned passengers not to climb aboard or to hold a Samsung Galaxy Note 7. Especially in November, Samsung should organize another recall, this time targeting… 2.8 million washing machines in the United States. And at the same time, judges make a raid on the headquarters of the conglomerate, in the context of the huge corruption case that killed the president Park Geun-Hye shortly after.
To forget these setbacks to repeat, Jay Y. Lee, the heir of the conglomerate Samsung happened to the controls in the middle of a storm, has several successes to his credit, in spite of everything : the transfer of the business of printing at HP Inc. for a billion dollars, the ipo of its subsidiary, Samsung BioLogics, and especially the biggest acquisition ever made by a chaebol outside of Korea, that of the king of the electronic audio american Harman mid-November for $ 8 billion. Still, it is without doubt that the release of the Galaxy S8 , which will be unveiled at the end of February, which will end up the unfortunate of the Note 7.
A condition to make only sparks.
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