Mobile

Galaxy Note 7, RIP. Samsung, you've got to rebuild the trust

A look at some of the steps Samsung will have to take to win back the public's confidence.

Sarah Tew/CNET
Now Playing: Watch this: Death of Samsung's Note 7 leaves unanswered questions
2:15

Samsung's Galaxy Note 7 debacle is nothing short of devastating.

The company confirmed on Tuesday that it had permanently shut down production of the Galaxy Note 7, bringing to an end the saga of the troubled, fire-prone handset. On Monday night, it had issued a warning to users to power down and turn in their phones.

That's a good start, but Samsung will have a long way to go to win back the public's trust.

Samsung, after all, is facing an unprecedented crisis, different even from the massive Volkswagen recall from this year or even the Tylenol debacle in 2010. The Korean electronics conglomerate was in enough hot water after the initial recall, but a second recall of replacement units raises questions about its judgment and ability to release a safe product. From a sales perspective alone, the loss of the Note 7 could cost $2.75 billion, according to Macquarie Research.

The residual effects in terms of consumer perception and its brand could be even more damning, and may extend to Samsung's massive line of products, from refrigerators to televisions to washing machines.

The Samsung Family Hub refrigerator may be one of the side products that survives this debacle.

The Samsung Family Hub refrigerator may be one of the side products that survives this debacle.

Samsung

"The big cost will be how it hurts the brand," said Simon Blanchard, assistant professor of marketing at Georgetown's McDonough School of Business. "It's going to follow them for quite a while."

But not all is lost. Here are the steps, both logical and drastic, that Samsung needs to take to repair its reputation and win you back. (Samsung declined to comment beyond today's statement confirming the shutdown.)

Get proactive. Samsung made a bold move when it recalled the first run of Note 7 phones. Then it got more tentative. The last few days have seen a trickle of statements from Samsung, even as its carrier partners have moved quickly to distance themselves from the phone. Early Monday, the company said it would "temporarily adjust" the production schedule of the phone. By Tuesday, it had shut down completely.

That also means Samsung needs to get proactive in getting the roughly 1 million customers who bought a Note 7 to trade in their phones, including the die-hards who'd rather keep the phone and take their chances. The last thing Samsung needs is something more tragic to happen than a few ruined phones and a singed airplane carpet.

"Fortunately, in all these instances nobody got seriously injured," said Carolina Milanesi, an analyst at Creative Strategies.

Make good on this disaster. Many Galaxy Note 7 owners didn't just buy the phone -- many likely bought accessories like phone cases and charging docks. Samsung has to go beyond simply offering a replacement for its phones; it needs to make sure every one of its customers is made whole.

Samsung said it was already offering a reimbursement on related accessories purchased through carriers, but that policy should extend to third-party accessories as well.

Samsung has said Note customers are its most loyal, so it really needs to keep them happy.

Be upfront. Samsung gave a vague explanation of why the battery overheated. The company will have to be more forthright -- and specific -- the next time around.

"Samsung has to own the mistake and explain why it's not a problem for all of its products," Blanchard said. "It's possible to recover from this, but it does require some transparency."

CNET attempted to figure out why the Note 7 phones were catching fire, but the results are inconclusive. Samsung could shed a little light.

Double down on Galaxy. These troubles mean it's even more important for Samsung to wow when it comes to its next new phone. Based on its track record, that will be the Galaxy S8, which will launch sometime early next year.

Samsung will have to work hard to erase the memory of this incident, and it will likely have to endure some jabs and questions about the safety of future products. But Samsung more than ever needs a breakthrough device.

samsung-galaxy-s7-edge-olympic-edition-2016-9740-001.jpg

The Galaxy S7 Edge is now the best phone in Samsung's lineup.

Josh Miller/CNET

You could argue that the Note 7 incident has tainted the Galaxy name, but it's unlikely that Samsung will drop the brand that it's poured billions of dollars into over the last six years.

"Samsung has invested far too much in it, and the Galaxy S products -- its main premium phones -- are not affected," said Avi Greengart, who covers consumer products for Current Analysis.

He and other analysts suggested the stylus, the big differentiating factor in the Note, could make its way to the Galaxy S line.

Kill the Note brand. This is by far the most drastic move. Samsung will have to cut its losses and wipe the Note brand off its slate.

That's easier said than done, given the success of the Note family before this problem and the fact that the whole trend of oversize phones originated with Samsung. But the Note brand is tarnished beyond repair. Think of the Ford Pinto's problem with bursting into flames after being rear-ended. People still snicker about that one, four decades later.

What will they say about the Note 8? "This one doesn't explode!"

In this case, starting fresh may be the best way to ensure the Note 7 is a faded memory.