Samsung’s 2016 started off booming with first quarter profits up 12% from the previous year and had its best Q2 in over two years with operating profits up 17.4%. Unfortunately for the tech giant and the world’s leading cell phone manufacture the introduction of the Note 7 saw future profits go up in flames.
For years smartphone enthusiasts raved at the innovations Samsung brought to the table. Long tabbed as the primary rivals to Apple’s iPhone, the Samsung Galaxy and Galaxy Note were some of Android’s highest regarded devices but this year was more bust than boom... or should I say combust.
As most of you have heard the Samsung Note 7 has had issues with exploding batteries so much so that Samsung had to issue replacement devices. Unfortunately, the replacements were also prone to exploding, and catching fire prompting the tech giant to issue a massive recall. Note owners are instructed to ship their phones in special fire-proof boxes, and only to have them travel by ground. Since the recall the FAA has even issued a ban of Note 7s on airplanes and has deemed boarding an airplane with one a federal crime. This has already started to cause issues as TSA agents, flight attendants and other airport personnel are on the lookout for the device, but many of them aren’t trained. People with all sorts of Samsung devices are being forced to leave their devices behind or risk losing them.
With all the horrible press Samsung has officially discontinued the Note 7 and are rumored to be getting rid of the “Note” moniker all together. As per Android Authority this massive blunder is expected to cost Samsung $17 billion dollars in lost revenue and potentially another $1.5 billion in disposal fees. The expected hit has Samsung’s Q3 operating profit 30% below last year’s.
While any other fiasco like this is would likely cripple another manufacturer, Samsung has a large enough catalog of profitable divisions that the long term outlook while not great, isn’t bleak. No one can really say the long term impact of this, the one thing we know for sure is with the holidays coming up be ready for longer waits at the airport, and if you have a Samsung device know your model in the event you’re stopped.