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Samsung’s Note 7 recall couldn’t come at a worse time

Korean giant recalls all 2.5m Galaxy Note 7 models sold so far because of battery flaw which can cause handsets to catch fire

If Samsung was experiencing schadenfreude as Apple’s massive Irish tax bill threatened to overshadow this week’s iPhone 7 launch, it would have been shortlived. In its own miracle of bad timing, the Korean firm was forced to announce a global recall for the new Galaxy Note 7 because of a battery flaw which caused some handsets to catch fire.

The company has halted sales of the Note 7 – which was meant to be its best shot at distracting attention, and sales, from the new iPhone – and has recalled all those sold (which will be replaced). The device has been on sale for two weeks and on Friday Samsung was boasting that it had sold 2.5m units worldwide already.

That makes for a pretty hefty recall-and-replace operation, which could affect this quarter’s bottom line and Samsung Mobile’s recent financial recovery. But of course the real impact is on Samsung’s brand and image, at a time when it had recovered from last year’s smartphone doldrums and was seeing a strong upsurge in demand for its flagship items the Galaxy S7s and the Note 7. If it cannot fix the battery issue quickly, that momentum could be threatened, especially with a new iPhone in town.

“There’s definitely damage done and the whole incident is detrimental to Samsung’s image,” IDC analyst Tay Xiaohan told CNET. “The level of damage will depend on how Samsung addresses this issue quickly and solves the problem.” So far, Samsung has received 35 reports about the issue worldwide – though social media activity suggested far bigger levels of the problem – but will replace all Note 7s on the market.

In a statement, Samsung said: “Samsung is committed to producing the highest quality products and we take every incident report from our valued customers very seriously. In response to recently reported cases of the new Galaxy Note7, we conducted a thorough investigation and found a battery cell issue. To date (as of September 1) there have been 35 cases that have been reported globally and we are currently conducting a thorough inspection with our suppliers to identify possible affected batteries in the market. However, because our customers’ safety is an absolute priority at Samsung, we have stopped sales of the Galaxy Note7. For customers who already have Galaxy Note7 devices, we will voluntarily replace their current device with a new one over the coming weeks. Instructions on the replacement process will be shared next week.”

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