Skip to Content

Loading...

Series

Samsung Won't Recover From its Battery Issue

October 09, 2016 00:00 AM UTC
- Updated September 02, 2020 11:36 AM UTC

There is too much competition

Transcript
ERIN GRIFFITH: A second round of Samsung's Galaxy Note 7 phones have been catching on fire. Bob, can Samsung bounce back from this crisis? ROBERT HACKETT: No shot, Erin. I mean, first of all, let's clarify. These phones are not just catching on fire in the figurative sense, they're catching on fire in the literal sense. These phones are exploding. So Samsung, they came out with their Galaxy 7 phone. And everybody thought this was going to be the moment that Samsung took back the top end market from Apple. The iPhone has utterly dominated that in recent months. But actually, this has been a disaster for Samsung. Because both the first 7 phones have been exploding, and also the replacement ones have been exploding. So abject failure on the part of Samsung. ERIN GRIFFITH: Right, I agree. This is really bad luck for Samsung. But it's not the first time a tech company has had battery problems. In 2012, Apple's MacBooks had exploding batteries. And they pretty much survived that crisis. And then Tesla famously had some battery fire problems of their own. So both of those companies have emerged, their brands intact. And I think Samsung can do the same. ROBERT HACKETT: That's true, but I think we're comparing apples and oranges here. Because I mean, look at Samsung's crisis response to the situation. At first, they said, OK, we're going to replace the phones. Great. Everybody was happy about that. It was a good response. But Samsung said that they think that the batteries are at issue here. It's probably the battery. Something's wrong with them. We'll get a new supplier. Actually, they got a new supplier, and the phones are still exploding, according to reports. So I mean, clearly, this is something that goes deeper than just the batteries. This is something that affects the phone or the software, probably. That's a huge issue. ERIN GRIFFITH: It's a huge issue, but I think it's one that Samsung can fix. This is a long term thinking company. They've been around for a very long time. And they're a huge conglomerate with their hands in all kinds of businesses. Phones is just one of them. But they're very long term thinking. And I don't think they're just going to give up or sort of let this one crisis completely dominate them for the next few years. And plus, this was their most innovative phone. And it was very well reviewed. And so I think once they get past this crisis, they can go back to innovating. And they can maybe take on Apple. ROBERT HACKETT: You're more optimistic than I am. I mean, the smartphones are so critical to Samsung's success. The company makes tons of revenue on its phones. Also, it's how consumers experience the brand. And if they're exploding, that looks horrible. Plus, you've got an activist investor that recently took a stake in the company. They're agitating to split its electronics unit into two parts. And so this disaster is not looking good for Samsung. I mean, this is not going to help their case by any means. ERIN GRIFFITH: That's a fair point. For one show that's always on fire, come to fortune.com for more Tech Debate.