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9 Reasons Why Samsung Is In Big Trouble

The company is on fire, but not in a good way.

Originally posted on
Updated on

A series of unfortunate events.

The Korean electronics giant released the Galaxy Note7 smartphone in August. By September, the US Consumer Product Safety Commission officially recalled the phone, and Samsung offered customers refunds or replacement Note7 phones that were supposed to be explosion-proof.

But less than a month later, amid reports that even the **replacement** phones were exploding, Samsung has stopped the Note7's production and sales and asked everyone to return all the phones. Consumer safety agencies the world over have recalled roughly 2.5 million Note7s. Airlines have banned the phone from planes entirely. Samsung is in trouble.

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TL;DR: Remember the fiery hoverboards of yesteryear?

Nieuwsbite / Via youtube.com

Samsung's current situation is just like that — if the people who made hoverboards were a dominant multinational conglomerate and one of the major forces in the South Korean economy.

Let's take a moment to observe the phone's more incendiary qualities.

View this video on YouTube

YouTube / Via youtube.com

On a creepy home security camera in Hawaii, for instance. Or in a South Korean Burger King. Even in a Jeep in Florida. Oh, the places this phone will blow!

Samsung is sending people explosion-proof packaging to return their phones.

View this video on YouTube

youtube.com

Not reassuring.

So what degree of yikes is Samsung facing? Let's discuss.

It's important to keep in mind that Samsung is a global conglomerate worth $200 billion that makes a range of products, from ultrasound machines to virtual reality headsets. The Note7 struggles will primarily affect its mobile business, not necessarily the rest of the corporation. But because the Note7 is such a visible product, the real fallout from this explosion may be damaged trust in Samsung as a brand. The company has not yet responded to a request for comment.

1. It's recalled its marquee phone.

The Note7 was supposed to be Samsung's flagship product, and it had a chance to lure away iPhone users fed up with Apple's plan to ditch the headphone jack. That's obviously not going to happen anymore.

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Back in September, when news of the recalls hit, the company lost as much value in market capitalization as the entire Hewlett-Packard company is worth. Things have only been getting worse. The Verge reported that Samsung slashed its operating profit projections for the third quarter of 2016 by 33 percent. The company estimates the recall will cost $5.3 billion.

3. Samsung also bungled the recall. Badly.

After many reports and videos of exploding and smoking phones, Samsung first issued a voluntary recall of the phone that let owners exchange it for a replacement. Then the US Consumer Product Safety Commission recalled the phone officially, mandating that everyone get a replacement or a refund. Then the replacement phones started exploding, leading to the current debacle: Samsung is taking the phone out of production permanently.

4. Especially in China.

After the official recall in the US, Samsung issued a long statement saying Chinese Galaxy Note7s, which were manufactured by a different company than phones sold elsewhere, were fine. Chinese consumers said otherwise: Their phones were still exploding. Eventually, on Oct. 10, Samsung got around to recalling the phone globally. Now it looks like Samsung was simply taking advantage of Chinese consumers and hoping to sell more defective, dangerous phones. China is the world's largest smartphone market. Not a great idea to anger your biggest customer base.

5. To make matters worse: Google.

Google develops the Android operating system on which many Samsung smartphones run. And in early October, Google debuted a new smartphone, Pixel, which Google designed with an aim to develop the same sort of hardware-software integration that has made Apple’s iPhone successful. That means Samsung is facing stiff competition when it's already down on the ground.

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6. Oh, btw, also: Apple.

Samsung is also on the defensive in its high-profile lawsuit against Apple. A US court ruled that Samsung infringed on three of Apple's iPhone design patents, penalizing Samsung $399 million. Samsung has appealed the ruling, and now the two are battling it out in the US Supreme Court. This is just not Samsung's year.

7. There could be legal fallout for Samsung.

One man has already sued Samsung, alleging that his Note7 exploded in his pants. Class action lawsuits may follow.

9. Unsurprisingly, a lot of people no longer trust Samsung. Cue the internet jokes.

Things people do *not* want their smart phones to do, in order: 1) remove headphone jack 2) explode

When your shampoo is manufactured by Samsung..

There's a mod for GTA 5 that lets you use Samsung's exploding phone as a grenade https://t.co/OZaEgpY8YG

  1. How screwed is Samsung?

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    Fire
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    Biggest fire
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9 Reasons Why Samsung Is In Big Trouble

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How screwed is Samsung?
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Blake Montgomery is a reporter for BuzzFeed News and is based in San Francisco.

Contact Blake Montgomery at blake.montgomery@buzzfeed.com.

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