Samsung Galaxy Note 7 Battery Recall May Be Costliest Tech Safety Problem

Following dozens of reported fires and problems stemming from overheating Samsung Galaxy Note 7 smart phones, which have even occurred among replacements issued after an initial recall last month, the manufacturer has reportedly decided to completely scrap production and sale of the new Galaxy Note 7, which may cost Samsung nearly $20 billion and tarnish the company’s reputation indefinitely. 

The U.S. Consumer Product Safety Commission (CPSC) announced a Samsung Galaxy Note 7 recall on September 15, after receiving at least 92 reports of the lithium-ion batteries overheating in the United States. The Samsung phone battery problems resulted in at least 26 burn injuries, and 55 reports of property damage to homes and vehicles.

Samsung’s original recall announcement estimated roughly 1 million devices were included in the recall, and set forth a plan to offer replacement Galaxy Note 7 models with different batteries that would note pose an overheating or fire risk. However, since the recall Samsung has received at least 35 additional overheating reports and five reported fires stemming from Galaxy Note 7 devices with replacement batteries offered through the September recall remedy.

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Following the additional replacement battery fire reports, Samsung and the CPSC have expanded the scope of the overheating issues and are currently reviewing the recent replacement and original lithium ion battery fire reports to determine the source of the issue.

Amid the rising number of overheating reports from original and replacement batteries within the Galaxy Note 7 smartphones, Samsung updated their online “Consumer Guidance”, indicating that all carriers and retail partners are being asked to stop the sale and distribution of the Galaxy Note 7 devices and to not offer the device as an exchange or replacement phone to customers.

The original recall, consisting of roughly 1 million Samsung Galaxy Note 7 devices, is now estimated to include nearly 2.5 million of the smartphones already distributed throughout the global market, with the U.S. being one of, if not the, largest consumer market.

Similar to the reaction following reports of exploding lithium-ion battery products contained in hoverboards and electronic cigarettes, the U.S. Federal Aviation Administration (FAA) announced a Samsung Galaxy Note 7 ban on any aircraft, prohibiting individuals from turning the device on, charging it or stowing the phone in any checked baggage.

Samsung Faces Financial Troubles Over Recall

Samsung is expected to face a major financial hit due to the recent Galaxy Note 7 battery recall, as the device was supposed to be the company’s top producing smart phone, launching just months before the holiday season.

Some market analysts have projected the stop in sale of the Samsung Galaxy Note 7 could cost the manufacturer upward of $17 billion.

On Tuesday, Samsung Electronics saw nearly $20 billion wiped off the it’s market value, with shares dropping eight points by the end of the day, making it the largest daily percentage decline since 2008.

The damage to Samsung Electronics’ quality control reputation is still unknown at this time, and may take several months to unfold, to see if consumers question or lose faith in the safety of the company’s electronics.

The decline in in Samsung’s presence in a competitive smartphone market, especially around the holiday season, will also give room for smaller manufacturers, such as Oppo, Vivo, LG Electronics, and Sony, to potentially steal away customers.

The biggest concern of the unfortunately timed Samsung recall is the loss in competition against Apple Inc., who just released the new iPhone 7, and is now likely to dominate over the holiday season without competition from the large-screen Galaxy Note.

The CPSC and Samsung are actively investigating the source of the overheating issues. Meanwhile, customers are being asked to contact their carrier or retail outlet where they purchased the Galaxy Note 7 for a full refund, or exchange for a Galaxy S7 or Galaxy S7 edge


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