Note7 is dead but Galaxy may live on

TOTAL RECALL: Customers returning their Note7 mobile phones at a Seoul dealership yesterday. Negative perception of the phone has risen, according to the Korea-Insight Institute. But Samsung may retain the Galaxy brand as it would be too costly to establish another one.


    Oct 14, 2016

    Note7 is dead but Galaxy may live on

    SPECULATION is high that Samsung Electronics may discard the Note brand, as the company's brand reputation has suffered serious damage from the Galaxy Note7 explosions and the consequent pullout of the device from local and global markets.

    "Samsung is recommended to drop the Note brand as consumers may still find it dangerous even when the new Note8 comes out," Kim Duk Jin, vice-chief of private-run Korea-Insight Institute, told The Korea Herald.

    The South Korean tech giant on Tuesday decided to discontinue the phablet upon repeated incidents of it catching fire in different parts of the world.

    The suspension led the company on Wednesday to revise its operating profit estimate for the third quarter down by 29.63 per cent year-on-year to 5.2 trillion won (S$6.3 billion).

    According to the institute, the perception of the Galaxy Note7 has significantly changed over the past two months, even in Samsung's home turf in South Korea.

    The company reportedly has 70 per cent of the smartphone market in the country.

    Negative perception of the phone rose to 53 per cent in October from 34 per cent in August, when the phone was first rolled out.

    Positive perception has dropped to 42 per cent from 62 per cent during the same period, according to the institute, citing local solutions firm Konan Technology which analyses social network services.

    Its brand reputation has also been hit hard globally as many airports issued notices banning passengers from carrying the Galaxy Note7 on board or in cargo, following dozens of reports of the fire-prone smartphones.

    However, Samsung is likely to retain the Galaxy brand.

    The cost would be too high to create another premium brand like Galaxy, which still has a high profile and loyalty globally, according to telecom experts.

    Lee Hae Hoon, a lawmaker of The Saenuri Party, said the halt in production of the Note7 costs the company around 2.2 trillion won.

    "Samsung appears to have given up the money to save the reputation of the Galaxy brand," he noted.

    The Galaxy series was first unveiled in 2010 after the production of Omnia - which was known for bugs and low performance - was discontinued.

    At this point, the most critical move for Samsung is to find out the causes of the Note7 explosions and restore trust in the market, experts said.

    "Samsung should first accurately find out what led to the explosions and honestly disclose them to consumers.

    "If the design was the problem, thorough investigation should be carried out before launching the Galaxy S8," said Lee Byung Tae, a professor at KAIST's College of Business.

    Samsung's new flagship smartphone Galaxy S8 is expected to be unveiled with drastic changes at the Mobile World Congress in February next year.

    The new phone is likely to adopt a bezel-less screen without a home button.

    But this significant physical change may also lead to technical faults.

    A bezel-less screen is more vulnerable to external shocks and consumes more battery power, which may also cause heating problems, the experts said.

    "As the hasty launch of the Galaxy Note7 has been said to have contributed to the crisis this time, Samsung should not feel rushed to unveil new features for Galaxy S8," an industry source recommended.