The Recall: Samsung and the Galaxy Note 7

On Monday, Samsung is in the middle of the biggest recall in the history of the smartphone, and the recall is about a battery that burns. The company announced on Friday that it was recalling every Galaxy Note 7 it had sold, around two and a half million phones, after reports that the batteries were exploding and catching fire. The phone that had been called the best in the world became the phone that could not be trusted. The recall is the September 2016 story, and the story is the lesson: the product is only as good as the component that can burn it down.

The Recall is the subject of this article: how the fires started, what Samsung did, why the recall was so hard, and what it means for the company and the industry. The recall was announced on September 2, and the company has been scrambling to replace the phones ever since. This is the story of the recall, and the story is about the moment the flagship became a liability.

1. The Phone

The Galaxy Note 7 was supposed to be the best phone in the world, and for a few weeks, it was. The phone was launched in August 2016, and the launch was the strongest of the year: the reviewers called it the highest scoring phone they had ever tested, the pre-orders were enormous, and the company was riding a wave of success. The Note series was the flagship of the flagship, the big screen phone for the people who wanted everything.

The phone was the product of Samsung's engineering excellence, the company that had spent years building the components that the rest of the industry used. The display, the memory, the cameras, the battery, Samsung made them all, and the Note 7 was the showcase. The phone was the pride of the company, and the pride was about to become the problem. The phone was the setup, and the setup made the fall harder.

2. The Fires

The fires started quietly, and the reports spread quickly. Within days of the launch, owners began posting pictures of Note 7 phones that had burned: screens charred, backs melted, batteries swollen and smoking. The reports came from different countries, and the pattern was the same: the phone that had been praised as the best was catching fire in ordinary use. The fires were the first cracks, and the cracks were real.

The fires were caused by the battery, and the battery was the heart of the problem. The lithium-ion cells that powered the phone could fail in a way that released the stored energy as heat, and the heat could ignite the phone. The design that made the phone thin and fast and long-lasting was the design that made the failure dangerous. The fires were the symptom, and the symptom was the battery.

3. The Announcement

The announcement came on Friday, September 2, and the announcement was a recall. Samsung said it was recalling all Galaxy Note 7 smartphones, halting sales in around ten markets, and offering replacement devices to the owners. The company acknowledged a defect in the battery cells made by its own battery subsidiary, and it said it would replace the phones with new units. The recall was the company's admission that the problem was real.

The recall was the largest in the history of the smartphone, and the size was the shock. Two and a half million phones had been sold, and every one of them had to be found, returned, and replaced. The logistics were enormous, and the cost was enormous, and the cost was the beginning of the financial damage. The announcement was the admission, and the admission was the beginning.

4. The Apology

The apology came from the man who ran the mobile business, and the apology was the human face of the crisis. Koh Dong-jin, the head of Samsung's mobile division, stood in front of the cameras and apologized, saying the company had failed to provide safe products. The apology was unusual for the company, and the unusualness was the message: Samsung understood that the crisis needed a human response, not just a corporate statement.

The apology was also the first test of the company's leadership. The executives had to balance speed, honesty, and confidence, and the balance was hard: the company had to admit the problem without destroying the brand, and the brand was the company's most valuable asset. The apology was the beginning of the response, and the response would define the company's year.

5. The Logistics

The logistics of the recall were the quiet nightmare, and the nightmare was the scale. Samsung had to contact the owners of two and a half million phones, arrange the returns, ship the replacements, and make sure the recalled phones did not end up on the secondary market. The airlines had to be warned, the regulators had to be consulted, and the retail channels had to be emptied. The logistics were the operation, and the operation was enormous.

The logistics were also the customer relationship, and the customer relationship was the hidden cost. Every owner who had to return a phone was a customer who had to be handled carefully, and the handling determined whether the customer stayed with Samsung or switched to Apple. The company had to make the recall easy, fast, and generous, and the making was the work of the next weeks. The logistics were the test, and the test was the customer.

6. The Stock

The stock market was the scoreboard of the crisis, and the scoreboard was red. Samsung's shares fell in the days after the recall announcement, and the fall reflected the market's estimate of the damage: the cost of the recall, the cost of the lost sales, and the cost of the damage to the brand. The stock was the market's first guess at the total, and the first guess was billions.

The stock was also the measure of the company's ability to recover. Samsung had survived crises before, and the market knew the company's history of resilience, and the history was the cushion under the fall. The stock did not collapse, and the reason was the belief that the company would fix the problem and move on. The stock was the verdict, and the verdict was the damage.

7. The Industry

The industry watched the recall with a mixture of sympathy and calculation, and the calculation was the competition. Apple was about to launch its new iPhone, and the Note 7's misfortune was Apple's opportunity: the customers who could not trust Samsung were the customers who might switch. The recall was the gift to the rival, and the gift was the reality of the market.

The industry also learned the lesson of the battery, and the lesson was the supply chain. The battery was the component that everyone took for granted, and the recall showed that the battery was the component that could bring down a flagship. The phone makers that relied on the same battery suppliers began checking their own supply chains, and the checking was the industry's response. The industry was the audience, and the audience was nervous.

8. The Lesson

The lesson of the recall is about the component that can destroy the product, and the component is the one nobody thinks about. The Galaxy Note 7 was the best phone in the world, and the best phone in the world was a phone with a battery that burned. The engineering excellence of the design did not matter when the energy storage failed, and the failure was the reminder that a product is only as good as its weakest part.

The lesson is also about the leadership of the crisis. Samsung apologized, recalled, and replaced, and the speed of the response was the measure of the company. The companies that handle the recall well can survive the recall, and the companies that handle it badly can lose the trust that took decades to build. The recall is the September 2016 story, and the story is the lesson: the product is only as good as the component that can burn it down, and the trust is only as good as the response when it does. The recall will be studied in engineering schools for years, and the study will focus on the moment the first fire was reported. The companies that treat the first report as the beginning of an investigation, rather than the beginning of a denial, are the companies that keep their customers. The company's recovery will be watched by the whole industry, and the watching will be the lesson: the brands that survive the crisis are the brands that answer the crisis with action, not excuses. Samsung acted, and the acting was the beginning of the comeback. The engineers who built the battery and the executives who rushed the launch shared the responsibility, and the sharing was the lesson in accountability. The recall was the price of the rush. The phones are coming back, and the trust is the test. The recovery starts with the recall, and the recall starts with the customer. The recovery starts with the recall, and the recall starts with the customer, every single customer.

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