RUSH TO TAKE ADVANTAGE OF A DULL IPHONE STARTED SAMSUNG ' S BATTERY CRISIS
exchange them with new ones. I don’ t have to get my PS,” he said, referring to his profit sharing, or bonus.“ It’ s humiliating.”
The post prompted many impassioned responses, mostly in support of the idea. Another worker said Samsung had trained everyone at the company to make no compromises with customers and the company needed a recall to live up to that standard. Then Koh himself weighed in. He apologized to employees and said he would consider their input in taking the appropriate steps. The next day, Koh went public with the full recall.
Samsung engineers rushed to determine the cause of the problem, working through the Harvest Festival holiday last week. The company’ s most complete explanations so far have come in reports to government agencies in Korea, China and the U. S. The initial conclusions indicated an error in production that put pressure on plates within the battery cells. That in turn brought negative and positive poles into contact, triggering excessive heat that caused the battery to explode. The chairman of the U. S. Consumer Product Safety Commission was more explicit when his agency announced an official recall on Thursday. He said the phone’ s battery was slightly too big for its compartment and the tight space pinched the battery, causing a short circuit.“ Clearly, they missed something,” said Anthea Lai, an analyst with Bloomberg Intelligence.“ They were rushing to beat Apple and they made a mistake.”
As it investigates, Samsung has stopped buying batteries for the Note 7 from the SDI affiliate. It shifted purchases to Amperex Technology Ltd., a unit of Japan’ s TDK Corp., according to local media reports.“ After extensive testing and as reported to multiple regulatory agencies, this issue is isolated to the battery cell from one supplier only,” the company said in its statement.“ All replacement Galaxy Note 7 devices will have batteries from other suppliers.” A spokesman for Samsung SDI said the company’ s stance on the recall is in line with what’ s been previously announced by Samsung’ s mobile unit and declined to elaborate.
The replacement program is prompting more reflection. The fast response was driven by good intentions. Samsung managers have studied past product recalls, including those at Toyota Motor Corp., and the conclusion seemed clear: Move quickly and dramatically. But Samsung moved so fast it got ahead of regulators who help organize such programs. In the U. S. for example, companies are supposed to notify the Consumer Product Safety Commission within 24 hours of uncovering problems. Instead, Samsung went public on its own and consumers didn’ t have clear guidance on how to exchange their phones.“ The official recall process provides a lot of clarity to consumers and there’ s someone checking to make sure the fix is a good one that serves the consumers in terms of safety,” said Jerry Beilinson, a technology editor at Consumer Reports.
Samsung, which may pay as much as $ 2 billion for the recall, said on Sunday it soldstakes in ASML Holding NV, Seagate Technology Plc, Rambus Inc. and Sharp Corp. for a total value of about 1 trillion won($ 891 million). While Samsung says Galaxy Note 7 sales will resume in Korea around Sept. 28, it has yet to specify when global sales would resume. The tumult has raised questions about whether Samsung’ s current management approach is sufficiently robust to handle the crisis fallout. In the wake of the recall, Samsung said it had nominated the younger Lee to join the
WHILE SAMSUNG SAYS GALAXY NOTE 7 SALES WILL RESUME IN KOREA AROUND SEPT. 28, IT HAS YET TO SPECIFY WHEN GLOBAL SALES WOULD RESUME company’ s nine-member board, a move that will give him a more active, and legitimate, role across its businesses. However, the younger Lee, who has kept a low profile inside and outside the company, is still far from having the kind of direct authority his father had. In addition to the corporate strategy office that oversees about 60 Samsung companies, Samsung Electronics has three CEOs.
“ This is a crisis and a blow to Samsung’ s image,” said Kim Sang Jo, economics professor at Hansung University in Seoul.“ Clearly there were procedural missteps and the company will have to restore consumer and investor confidence.”
Apple’ s iPhone 7 also wasn’ t as uninspiring as Samsung may have anticipated. Though it kept the same physical design with modest technology changes, loyalists still lined up at stores around the world on Friday to get the company’ s latest gadget. Twenty years ago, in a chapter of Samsung Group history that employees can recite by heart, Chairman Lee grew so frustrated by faulty mobile phones that he piled up thousands of the devices and lit the whole heap ablaze. Never compromise on quality, he exhorted the workers watching, putting Samsung on course to become the top seller of mobile phones in the world.
Today, Samsung phones are ablaze once again, only this time the flames threaten the company’ s hard-won image.“ The potential damage to reputation is far greater than short-term financial losses,” said Chang Sea Jin, a professor at National University of Singapore. – Bloomberg
64 Business Times Africa | 2016