Bloomberg: Note 7 fires result of Samsung’s rush to beat “dull” iPhone 7 to market

By , Sep 19, 2016


After they began hearing earlier this year that the iPhone 7 would look just like the previous two models, the top brass at Samsung Electronics, including its mobile chief D.J. Koh, have made the decision to outmaneuver Apple and move up the launch of the Note 7 to early August. In hindsight, it was a risky, ill-fated move that has backfired and damaged Samsung’s brand and reputation.

In its desire to beat the “dull” iPhone 7 to market, Samsung pushed suppliers to meet tighter deadlines which caused problems with the handset’s battery, according to a report Monday from Bloomberg citing “people familiar with the matter”.

Twenty years ago, Samsung’s chairman grew so frustrated by faulty mobile phones that he did something that has become part of the company’s history and culture:

“He piled up thousands of the devices and lit the whole heap ablaze,” writes Bloomberg.

“Never compromise on quality, he exhorted the workers watching, putting Samsung on course to become the top seller of mobile phones in the world.”

The problematic 3,500 mAh Note 7 battery (the previous Note has a 3,000 mAh battery) was supplied by Samsung SDI, in which Samsung Electronics holds a twenty percent stake and that counts Apple as a client.

From the report:

As the launch date approached, employees at Samsung and suppliers stretched their work hours and made do with less sleep. Though it’s not unusual to have a scramble, suppliers were under more pressure than usual this time around and were pushed harder than by other customers, according to a person with direct knowledge of the matter.

One supplier said it was particularly challenging to work with Samsung employees this time, as they repeatedly changed their minds about specs and work flow. Some Samsung workers began sleeping in the office to avoid time lost in commuting, the supplier said.

They approved a launch date ten days earlier than last year, on August 3 this year versus August 13 last year for the previous Note. A few days following the Note 7 introduction, reports began cropping up that the phone’s batteries were bursting into flame.

Realizing rushing to beat the iPhone 7 to market has backfired, Samsung executives “were in shock” and demanded to know what went wrong.

The initial conclusions indicated an error in production that put pressure on plates within the battery cells, which in turn brought negative and positive poles into contact, triggering excessive heat that caused the battery to explode.

An engineer wrote on the company’s internal online bulletin board a message, saying “Please recall all Note 7s and exchange them with new ones. I don’t have to get my profit sharing. It’s humiliating.”

The message prompted Samsung’s mobile boss to apologize to employees and take swift action the next day: he held a grim press conference in Seoul to announce that Samsung would replace all 2.5 million phones shipped so far.

“For us at Samsung, to earn consumers’ trust back is very important,” the company said in a statement. Additionally, the company’s top U.S. executive Tim Baxter issued a video apology to Note 7 customers, admitting that battery defects actually caused Note 7 fires.

“With battery cell defects in some of our Note7 phones, we did not meet the standard of excellence that you expect and deserve,” he said”. “For that, we apologize, especially for those of you who were personally affected by this.”

“To those of you who love the Note, we will work every day to earn back your trust through a number of unprecedented actions,” Baxter said.

He went on to confirm that new Note7 replacement devices will be available in the United States at most retail locations no later than September 21, 2016. Specifically, Note 7 sales will resume in Korea around September 28, but Samsung has yet to specify when global sales would resume.

The South Korean firm has since stopped buying Note 7 batteries from its SDI affiliate, shifting purchases to Amperex Technology, a unit of Japan’s TDK Corp.

“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.”

Following recent reports about exploding Note 7 in Chinese media, Note 7’s new battery supplier Amperex Technology Limited conducted a joint investigation with Samsung which determined that the incident was not directly linked to their batteries.

“According to the burn marks on the sample, we surmise that the source of the heating comes from outside the battery, and it’s very likely that there was an external factor causing the heating problem,” the battery maker said in a statement cited by Reuters.

Last week, Samsung announced a recall of the 1,858 Note 7 phones in China which were distributed before its official September 1 launch. The company said the phones sold through the official launch used batteries different from those in reported fires.

The worldwide Note 7 recall is estimated to cost Samsung as much as $2 billion.

In your view, did the exploding None 7 incident tarnish Samsung’s reputation?

Source: Bloomberg

  • Share:
  • Follow:
  • lekwame

    i see no samsung fanboys here today lol

    • Agneev Mukherjee

      About time they hide their hide.

      • OWashe
  • Miqdad

    If apple phone were exploding it would have been a much bigger deal!

    • Yes it would. Imagine Apple just saying no folks you’re charging it wrong lmao..

      • Rowan09

        It would be all over the headlines everyday. My friend has a note 7 and I told him send it back, but he’s being stubborn.

  • Tommy Gumbs

    They pushed the date up by a week? Ummmmm, I doubt it really would of mattered.

  • Rowan09

    So what’s the cause if it’s not the batteries according to Amperex? Samsung has no idea and should scrape the Note 7 all together this year. What a crippling move when Apple did incremental external upgrades for 3 years.

  • Jamessmooth

    With me, Sammys rep was already tarnished. This just adds more fuel to the fire. I’ve bought three Samsung products in the last 5 or so years: a TV, fridge, and the S3. All three products are (and were) trash and all had issues. My most recent purchase (the fridge) has been leaking water thru the crisper. I’m done with them. Never again.

    • Shinonuke

      Hey hey, I got a Samsung fridge and washer/dryer set. Please, don’t jinx it. Hoping it’ll will last

      • Jamessmooth

        Well, I sure hope it lasts for ya!

  • So an apology from Samsung amounts to blaming their partner for bad components and then switching to blaming the stress created by rumors that Apple would be releasing a “dull” product?

    Do they really think their Samsung fans are dumb enough to think that had they released 10 days later as originally planned that all QA and testing would have been done and that they would have not only released a phone that didn’t explode but that could have at least out performed Apple’s year old iPhone 6S?

    Come on Samsung, it’s not Apple’s fault (and that 10 days means nothing by that point as everything was in mass production either way by then) and it’s not your supplier’s fault. It’s your fault for not testing your own products well enough. Why can’t you own up in your apologies?

    • Shinonuke

      Rushing 10 days can mean that they stopped testing 10 days earlier and decided to mass produce. They did apologized. You don’t hear Chrysler or Ford apologizing about their cars not lasting like they should be.

      • The problems I have with this is that production of units is something that starts months before shipping to build up inventory. The S7 released in March this year which means that they started manufacturing phones in all likelihood back in January. At that point 10 days is only going to cut into the time for manufacturing, not the time for testing.

        Second of all, they released their phone March 11th. The iPhone released September 7th. I don’t know how on earth Samsung managed to pull that 10 days number out, but my calendar would suggest that there are in fact more than 10 days between those two months.

        Third, an apology should be you owning up to your failures. Not trying to play them down by blaming others. Not sure what Chrysler or Ford did or didn’t do, but they don’t excuse anyone else. As soon as you say “hey I’m sorry I’ll set this right”, “but… / what you have to know is… / and the reasons why are…” we have problems.

        Blame says, it’s not their fault and they are a victim too. But you can’t fix what you don’t control, and the only way Samsung can set this right is to own up to their mistakes (and that goes for any company). I don’t want to hear who they are going to blame I want to hear them say they messed up and what they are doing to set things right. End of story.

      • Shinonuke

        Your response is like an article. Very well written. I totally agree with you. They should just own up to it instead of putting blame.

  • Furrnace

    I think it will tarnish their reputation. But I already had a low opinion of them anyways. Probably, a lot of those people who have returned their Note 7’s are now buying the iPhone 7 Plus instead. Apple’s going to profit from Samsung’s mishap. I’ve owned Samsung Galaxy phones and they were always awful. Sluggish, slow, and always felt cheap in my hand. I think they had this coming. They sure love to dish out the criticism toward Apple, and now look; this is blowing up in their face (pun intended). I agree with the commenter earlier, if this had happened to an iPhone, even just one SINGLE iPhone, the news media would have blown up even more. Everyone expects crap quality from Samsung. They rushed the job on this to try and beat Apple to the punch, and hate to say it, they got what they deserved. They’ve been bullying Apple for so many years. And how does Apple respond to them: with utter silence. Haven’t heard anything from them about this. Not publicly anyway. Right there. Tells you which company has more quality and class.

    • Mike

      You used a samsung phone from like 5 years ago and you still compare it with an iphone… sounds like you haven’t even used a new samsung phone before. Crap quality from Samsung? the phone has better specs than any other android or iphone. You sound like an idiot and so do many other iphone users. Example: They take out the headphone and call it innovation… thats not innovation. Innovation is going from a computer hard drive to SSD…

      • Furrnace

        Whoa! Mike, I’m sorry I offended you in some way. But there’s no need for insults. It’s just a phone dude. If you must know, I had the Galaxy S3 and a Note 4. Also, I didn’t say anything about the headphone jack. That might not have been the best idea to remove it; but Apple didn’t call it innovation. They wanted more enclosure space for other components and to push the market in wireless tech. Optical drives are fading out in laptops too, that’s what happens. I’m not saying I agree with killing off the jack now, but I don’t know why everyone’s so surprised about it. As far as specs go, how’s that working out for you? The year-old iPhone 6s beat the Note 7 in multitasking and speed tests and the 7 is walking circles around it. It is what it is man. Specs and your sheer “numbers” don’t mean a thing, haven’t you learned that yet? Apple designs the OS and the hardware and they play nice together. Google makes your OS and Samsung makes the hardware so they have more walls to get around. You have a right to hate Apple just like I have a right to dislike Samsung. But you do realize you’re on an Apple fanboy blog right? And you’re one of few fAndroids on here, so I’m confused as to why you’re the one calling me names. I’ve been an IT professional for 12 years now so I can say I know a thing or 2 about tech.

      • Shinonuke

        Whoa. I have used Apple iPhone since 3GS and Samsung’s galaxy phones from S II to S4, note 3/4. I know I haven’t used the note 5/7 but I can’t bring myself to use the Android system. Samsung makes nice looking phones recently but not enough to switch over. I know I have been saying this a lot but unless they make a phone that is efficient and can play the games that I play without significant lags then I’ll jump ship.

  • askep3

    Remember when bendgate was a thing, and how everyone made such a big deal about it? Now this

  • Lalhluna

    Well, it was bound to happen when competing with higher power.