Note 7 Failure: Will Samsung’s Damage Control Efforts Pay Off?

by CXOtoday News Desk    Oct 19, 2016


After an awful end of its flagship Galaxy Note 7 smartphone, Samsung seems to have geared up to mitigate the further damage to its brand. Taking a serious lesson from the Note 7 debacle, the company has rolled out a slew of initiatives to cushion the blow. 

The company has now reportedly announced that it would compensate component suppliers for the discontinued Galaxy Note 7 smartphones and consider giving them orders for other models. Samsung assured that it would fully pay for unused Note 7 parts that have already been manufactured, compensate suppliers for unfinished components and pay for materials bought to make Note 7 parts.

After going through the worst debacle in its history, the South Korean smartphone major now plans to normalize its mobile business by expanding sales of models such as the Galaxy S7 and Galaxy S7 edge. Additionally, the company will focus on enhancing product safety for consumers by making significant changes in its quality assurance processes.

It is to be noted that Samsung has estimated a negative impact of approximately mid-3 trillion won in operating profit from the fourth quarter of 2016 through the first quarter of 2017, due to the discontinuation of Galaxy Note7 sales.

The company has also announced crucial expansion plans in India, where it enjoys around 25 percent market share. According to the reports, Samsung will be doubling its smartphone production capacity in India by the year 2029. 

Also Read: Will Galaxy Note 7 Debacle Ruin Samsung’s Indian Dominance?

The company has signed a memorandum of understanding (MoU) with the Uttar Pradesh government under which the company would invest Rs 1,970 crore in a local manufacturing facility in Noida. Ahead of assembly elections in the state, Samsung has also partnered with the state government for the ambitious free Smartphone Scheme, announced by Chief Minister Akhilesh Yadav.

Samsung’s manufacturing plant in Noida was first established back in 1996 and currently employs about 4,000 people. The plant produces various Samsung products such as smartphones, television set, refrigerators, and other home appliances. With this expansion, the plant is expected to create an additional 2,200 jobs for the local population. 

Samsung rival Huawei, which is currently placed as the world’s third biggest smartphone-maker, opened a mobile phone assembling unit in Chennai. Other prominent smartphone vendors which have already set-up plants in India include Lenovo, Xiaomi and OnePlus, among others. Samsung hold about 25 percent market share in India and the company competes closely with both domestic and Chinese brands in all the price segments. 

Being an industry leader for years, it is clear that Samsung will never let its legacy business tarnish due to recent product failure. In India, where the company is betting big on local manufacturing and various government projects, is putting huge resources to surge in the competition. However, at the same it Samsung should not ignore the competition from the other brands who are equally aggressive on its expansion plans.