If you’re a Galaxy Note 7 owner, we hope you’re in the process of sending it back from whence it came. Late last week, Samsung initiated a recall of their new Note 7 smartphone, covering 10 countries including their native South Korea and the United States. Samsung isn’t quite recalling every Note 7 unit worldwide, but with 2.5 million units coming back, it’s a huge hit to the company’s wallet and reputation.
The Note 7 was recalled after reports surfaced of batteries catching on fire or exploding. According to a Samsung release, 35 such cases had been reported as of September 1, after which the company found a “battery cell issue.” The issue must have been bad enough for Samsung to believe that cases of exploding phones could increase drastically, prompting them to initiate a recall. At first, Samsung’s recall did not cover the United States (the U.S. Note 7 and the international Note 7 have slightly different specs), but on Friday, Samsung reversed course and included the United States.
However, the recall isn’t a traditional recall, and that could cause more problems. On September 2, Recode reported that Samsung did not go through the United States Consumer Product Safety Commission (CPSC), which helps get the word out about recalls and informs buyers of their rights in any given recall situation. The report indicates that this could end in the Note 7 being banned from sale in the United States, even after the recall, unless Samsung does decide to cooperate with the CPSC.
The recall is, as it should be, an abundance of caution. The Verge quoted an unnamed Samsung official speaking to Korean news agency Yonhap as saying that, “Products installed with the problematic battery account for less than 0.1 percent of the entire volume sold. The problem can be simply resolved by changing the battery, but we’ll come up with convincing measures for our consumers.”
It’s not something to be done lightly. While it’s difficult to tell how much it costs Samsung to build a single Note 7, we have to figure replacing 2.5 million units represents a tremendous cost. Some estimates put Galaxy S7 construction costs at $255 per unit — the Note 7 likely isn’t too far off that (probably a little more expensive), making the recall a hit of anywhere between $600 million and $700 million, to say nothing of the hit to their stock’s value. Because the Note 7 is such a high margin device, Samsung can still profit off the phone if it fixes the issue quickly, but it certainly won’t be the success it could have been. Worse still, Samsung’s continued strategy of holding their annual Note event right before the iPhone launch has now backfired badly.
If you do have a Note 7, the easiest thing to do, per Android Central, is to give it to the carrier you got it from and let them deal with it. Note 7 owners who trade their units in will get another Note 7, a $25 git card or credit from the carrier courtesy of Samsung, and a similar loaner device.