Now that Samsung is ending production of its Galaxy Note 7 due to battery problems – and perhaps another operating flaw only as-yet alluded to – the question is where the company will go next. Samsung’s rise has been premised on its investment in high-end quality consumer goods, and the Galaxy Note 7 has damaged that reputation.
The battery fires made the phone, to paraphrase Ralph Nader, unsafe at any charge. (A stopgap measure to cap the charge at 60% to avoid fires did not resolve the problem.)
The South Korean technology giant may now lose up to $2.8 billion over the recall, “which would be enough to wipe out the entire mobile division’s operating profits for the fourth quarter” according to The Wall Street Journal. The New York Times cited figures from Strategy Analytics showing a $10 billion annual loss overall.
The goodwill and brand loyalty that saw the firm through the first few weeks of the crisis – 90% of exchange program customers reportedly opted for a matching replacement – have suffered since stories of the replacements malfunctioning surfaced.
Battery suppliers in the spotlight
In China, it may be a different story. Chinese regulators announced a nationwide recall of the Note 7, publicly clashing with Samsung on reports of device fires in the Chinese market. Samsung says these fires are not related to the present situation, while the regulators say they have documented cases proving they are.
The recall in China actually suggests that the battery problems are not limited to one supplier. But Samsung has yet to name the manufacturer of the defective batteries among its supply chain, and it is unclear why. Is it for legal reasons – if it is not just Samsung SDI, naming another company has ramifications at this stage – or it is because it is unclear if it is more than just one supplier affected?
A request for comment from Samsung US and its global PR agency, Edelman, regarding the company’s battery suppliers was not returned at the time of publication.
An agreement for China ATL to make the Note 7’s replacement batteries before the shutdown, at least, suggests a high level of confidence in the firm, best-known for building many of Apple’s iPhone batteries. The shutdown, though, now leaves this deal up in the air.
Samsung now is riding a lot of its hope on the Galaxy S8, which will be its first product to incorporate the company’s new Viv virtual assistant technology. Samsung acquired Viv Labs, the assistant’s designer, only last week and hopes to integrate Viv into other consumer products as well.
Samsung has not disclosed if and how the Note 7 problems will affect its supply chain for the S8’s own batteries.
Lithium-ion batteries have dominated the mobile market since the beginning, and materials science advances have made them more ubiquitous and reliable than ever before. But it can still be difficult to ensure quality control due to their fragility, a problem not unique to Samsung. All other major mobile makers have had to recall high-end products due to such faults. Indeed, despite their predominance, lithium-ion batteries have limits on how much of a charge they can safely hold in a conveniently-sized device.
Phones are not getting “smaller” in the way people imagined in the early 2000s, but obviously can do so much more, requiring more and more power. To date, the only real solution, which was proposed in the mid-2000s and has not made much progress since, is adopting silver-zinc batteries used in hearing aids for mass market smartphones and laptops.
Technologically, the design is proven and can be scaled up for these devices. But, it has not been adopted on a large scale anywhere. Geektime has reached out to Dr. Ross Deuber, CEO of ZPower, a company that makes silver-zinc batteries for consumer electronics, for further comment on this technology and will update the post pending his reply.