Samsung Electronics recently issued a voluntary recall on their newly released Galaxy Note7 devices, saying the battery cells of the device have the potential to overheat and pose a safety risk. Obviously, any recall is a serious matter and doesn’t ever look good for the company in question. However, I think Samsung has handled the situation pretty well, all things considered, even though the response wasn’t perfect. I want to explain that position here and it’s important that you read the complete analysis before arriving at a conclusion.
Timeline of events
When looking at recalls, it’s important first to get all the facts and understand the timeline of events. It’s a lot of information, but it’s worth going through it to get the full picture. Here’s how it played out, sequentially:
- Samsung announces that the Note7 is available for purchase in the U.S., Canada, Mexico, Puerto Rico, Australia, New Zealand, Singapore, Taiwan, the UAE, and Korea. This was the day when consumers were able to walk into stores and buy the device, though some who had pre-ordered received theirs a few days before.
- Samsung issues release entitled “Samsung Will Replace Current Note7 with New One” saying there were battery issues with the Note7 and consumers could exchange them over the coming weeks. The company also said that there were 35 reported cases globally, out of 2.5 million devices sold.
- AT&T issues their first press release on the issue, entitled “AT&T Statement on Exchanges for the Samsung Galaxy Note7,” offering information on exchanges. The original release text is now unavailable.
- T-Mobile issues their first press release on the issue, entitled “Samsung Note7 Recall”. It appears to have been updated on the 15th.
- Consumer Reports writes a story entitled, “Samsung Should Officially Recall the Galaxy Note7.”
- The FAA issues a “FAA Statement on Samsung Galaxy Note 7 Devices” advising passengers to not turn on or charge the devices on board aircraft. Airlines start announcing this in their passenger pre-flight safety checks.
Southwest Airlines app notice (Credit: Patrick Moorhead)
- The CPSC issues “Press Statement from the U.S. Consumer Product Safety Commission Regarding the Samsung Galaxy Note7,” urging consumers to “power them down, and stop charging or using the device.” They announce they’re working with Samsung to formally announce a recall of the device.
- AT&T updates their press release from the 2nd to echo CPSC’s “power down” order.
- Samsung starts emailing out “power down” orders and exchange information. The email was entitled, “Power down your Note7 and exchange it now”.
Samsung September 9 “power down” email (Credit: Patrick Moorhead)
- Samsung issues a “Samsung Urges Galaxy Note7 Users to Immediately Participate in the Replacement Program,” urging Note7 users to immediately “power down” and participate in the replacement program as soon as possible. They say they are “collaborating with national regulatory bodies” to solve the problem.
- Sprint issues their own “Samsung Galaxy Note7 Update,” reiterating the prior releases from Samsung and the CPSC, and giving specific exchange instructions. They offer consumers a $25 service credit, if the Note7 is exchanged for a Galaxy S7-branded phone.
- The CPSC essentially begins their official recall, thought it should be noted CPSC communications with vendors is confidential and generally preceeds an official recall announcement. The CPSC post to their website entitled “Samsung Recalls Galaxy Note 7 Due to Serious Fire and Burn Hazards.” They claim there were 92 reports of the batteries overheating in the U.S., including 26 reports of burns, and 55 reports of property damage, including fires in cars and a garage.
- Sprint issues another press release entitled “Sprint Samsung Galaxy Note7 Customers Can Get Replacement Devices Beginning Next Week,” saying just that, and encouraging customers still using the Note7 to call their local Spring retail location to schedule an appointment to pick up their replacement device.
- T-Mobile appears to update their previous release, saying that the new CPSC-approved Note7s will be available on Sept. 21st.
- Recode reports that 130,000 of the 1 million Note7s sold in the U.S. have been returned—around 15%.
- Samsung Electronics releases video of U.S. Samsung President Tim Baxter entitled “President of Samsung America Addresses Note7 Voluntary Recall.”
- AT&T issues release entitled “Samsung Galaxy Note7 – AT&T Statement on CPSC Recall,” reiterating the “power down” command, and adding the September 21st date for new Note7s.
- The FAA issues guidelines on any recalled items, prohibiting recalled or defective lithium batteries and lithium battery-powered devices from being turned on or charged on board aircraft.
- New CPSC-approved Note7s are supposed to be available through exchange programs at AT&T, T-Mobile, and Sprint.
As you can see, there are many different moving parts to the story. Since Samsung doesn’t have their own stores in the U.S. (like they have in other countries with 29,000 points of sale), they’re having to work through the carriers—making things inherently more challenging.
Making the best of a bad situation
I don’t want appear to downplay how serious this recall is. It is. What makes this situation so unique is that it’s a smartphone. Smartphones are so close and personal, in the sense that we wear it on our body, put them up to our heads, and even sleep next to them. This understandably compounds the reaction.
But with all the understandable grief put on Samsung, while not perfect, I believe Samsung did do the right thing and focused on customer safety – they have been ultra-cautious for the customer. They’ve followed CPSC regulations, even uniquely offering an exchange program in advance of CPSC announcing the official recall. I believe Their preemptive strategy helped Samsung avoid the sticky situation of nearly twice as many Note7 devices being in customers’ hands, but had an opposite effect in that people questioned why they didn’t work through the CPSC. Samsung told me they were actually working with the CPSC but couldn’t talk about it “because those conversations are confidential”.
Samsung Note7 paid search result on Google.com (Credit: Patrick Moorhead)
If Samsung hadn’t offered an exchange program on the 2nd, they would undoubtedly have been criticized for allowing more at-risk devices to be sold. Playing armchair quarterback, I would have preferred Samsung to have issued their “power down” directive on the 2nd instead of the 9th—but I can only speculate that it probably took a week for Samsung to fully characterize the severity of the problem. If I were them, I would also have told the public when exactly the CSPC was informed of the issue, but again, apparently those conversations are confidential and couldn’t tell that to Consumer Reports. I also need to say that I cannot validate or verify why those conversations need to be confidential.
For some background, recall completion rates are generally lower than you might expect. The auto industry, in which people are used to bringing in products for checkups, has one of the higher completion rates at 48%. Electronics are significantly lower and I have heard that a 30% return is good. Since Samsung got out ahead of the official recall, they’ve already been successful by reaching the 15% mark—though without context that number may sound small.
Samsung not the first big company to issue a recall
It’s important to keep this all in perspective—while recalls are certainly a serious matter, they happen a whole lot in electronics. And we’re talking with big brands here, not just fly-by-night companies with shoddy reputations. I’m not going to name any specific companies in this column, but you can see there are a lot of electronics recalls:
- U.S. CPSC-issued electronics recalls here—16 since the beginning of 2016.
- Best Buy U.S.’s list of recalls shows 10 so far in 2016.
- Canada’s list of electronics recalls shows 17 this year.
- Australia consumer safety site shows 10 in 2016.
There’s overlap in these lists, but you get the picture. While it admittedly sounds a little cavalier to say “these things happen,” the truth of the matter is they kind of do—even from big name companies with big brands and the overhead to have massive supply chain and quality organizations. Note, too, that most of these recalls involve power, power cords or batteries. I worked in product management, product marketing and product strategy over 20 years and it’s an unfortunate reality that power is a tough thing.
While a serious recall such as this won’t necessarily ruin a company’s reputation, poor handling of it certainly could. In the end, this is what Samsung will be measured on. While there’s a few things I might have done differently, Samsung has more-or-less done all the right things they need to do to mitigate the situation, look out for consumers and minimize fallout. They were wisely preemptive in establishing their exchange program, and by getting the jump on it, have demonstrated a pretty clear commitment to customer safety. We’ll see what happens next, and how many phones end up being exchanged when all is said and done, but I think Samsung has handled this pretty well so far. I’m looking forward to getting my replacement unit the week of the 21st as it really is a good smartphone.