Following Samsung’s announcement yesterday for all retailers to halt sales of the Note7, this morning there are reports that the company is ending the Note7 period. Samsung is finally going to try and cut its losses before they sink any more money into the device. But beyond revenue loss, the company is going to suffer a reputation loss and that could hurt them in the long term even more. The Note7 story has gone global and even mainstream media outlets are reporting daily on it, not just technology media like ourselves. This means the news is reaching millions more eyes and ears than it normally would through tech news channels.
The news was reported earlier by the WSJ, and a spokeswomen for Samsung confirmed it is ending production of the device, telling TechCrunch: “We can confirm the report that Samsung has permanently discontinued the production of Galaxy Note7.”
Now there are rumblings of mishandling of not only the exploding Note7 situation but handling of the launch of the device as well. Some are accusing Samsung of rushing the device to market before properly testing and vetting the device to beat Apple’s iPhone 7 line. There are also accusations being hurled toward Samsung about the handling of the Note7 replacements which had the same fiery issue the first batch of Note7’s had.
Reuters is reporting that the Note7 debacle could “burn a $17 billion USD dollar hole” in the company’s pockets but they do have the ability to absorb the loss. What they’ll have a harder time absorbing is the loss of reputation.
If Samsung stops selling the Note 7s, that will translate into lost sales of up to 19 million phones, or nearly $17 billion, that the firm was expected to generate during the Note 7’s product cycle, according to analysts including those at Credit Suisse.
There is also speculation that the Note brand may be done as well, the reputation of the Note name is fully tarnished and probably wouldn’t recover. Samsung has a deep hole to dig out of, even with the ability to absorb a huge financial loss the reputation loss is what they’ll have a hard time gaining back. That’s not to say it can’t be done, they can certainly win back their reputation but they’re going to have to be diligent in cleaning up the Note7 mess and then concentrate on producing the next big thing.