Reports of device batteries catching fire may harm the brand’s reputation but suppliers will feel the financial pinch.
Samsung Electronics has announced a massive Galaxy Note 7 recall following a growing number of reports of exploding batteries. The devices have been catching fire while they were recharging. This could mean Samsung’s reputation may take a hard hit. However, the brunt of the financial impact could end up being directed at the company’s suppliers.
Samsung’s response to the rechargeable battery problems with the Note 7 has been a rapid one.
When the Galaxy Note 7 recall was announced, Samsung said it would provide a free battery replacement or after/service. That said, it has decided not to offer customers a refund. This has been interpreted as a strategy to reduce the impact of the incident on the brand. It has also been seen as a rather inconvenient offer for the customer.
The Note 7’s official launch was on August 19 in Korea. Media there reported the sale of over 400,000 units within the country. J.P. Morgan has estimated that there will also be a delay in the shipment of up to two million units, assuming the recall affects all the devices that have been made.
The Galaxy Note 7 recall may also play a large role in deflating the current market response.
J.P. Morgan’s report said “This could also cool down heated market response, but we do not expect a material impact on sell-through in the next three to six months.”
That said, the analysts have recently reduced the level of their downside risk expectations. They have predicted that they might drop from the level maintained at present to approximately 13 million units during the third and fourth quarters of this year. The J.P. Morgan analysts explained “The company plans to correct the recall-related supply bottleneck within next couple of weeks and we expect a solid sell-in/sell-through trend from later part of this quarter.”
It’s important to point out that the incidents leading to the Galaxy Note 7 occurred only during the wired charging. The wireless charging feature has not been associated with the fires.
The electronics and tech giant is introducing its branded app just in time for athletes and spectators.
Samsung Electronics Co. has announced that it is launching its mobile payments app, Samsung Pay, in Brazil. Certainly, the fact that the Olympic Games are headed to the country played a vital role in this decision. Should the launch be successful, it may open the door to more countries throughout Latin America.
Mobile phones are a primary access point for the internet in Latin America, making this strategy promising.
The mobile app, Samsung Pay, first saw its world debut in South Korea. That occurred nearly a year ago in August 2015. It has since become available to more countries. It has been in the United States since September 2015. Now, Samsung will be sending the mobile payments service to smartphone users attending – and participating in – the Olympic Games. This, according to the vice president of the unit, Haley Kim.
Samsung Pay will be up against some stiff competition as Apple and Google also make a grab for that market.
The largest company in South Korea will be pitting its mobile payments service against Google Pay and Apple Pay. This is no small market opportunity. Forrester Research Inc. predicts that by 2019, it will have broken the $142 billion mark. Those three companies have been rivals in every major marketplace. They are seeking to draw customers to their apps not just to encourage them to use the mobile applications themselves, but also their devices.
In Brazil, Samsung already has a 42 percent share, said Gartner Inc.. That is sizeable when taking into account that there are more active mobile phone accounts than people in the country. The company is aiming to use its mobile payments service to bring in an even larger number of new users. That said, it could be a challenging effort considering the current state of the Brazilian economy. It is currently suffering the deepest depression it has faced for at least one hundred years.
Kim explained that “The demographic group buying and using these devices in Brazil is more the high-end or premium customers who may not be significantly impacted by this economic crisis.” Samsung Pay may have a bit of an advantage as the company is a corporate sponsor of the games. It is also selling a limited edition Galaxy Edge S7 featuring the Olympic rings and colors. The mobile payments app will also be compatible with users of other S7 devices, in addition to the A5 and A7 models and others.
