After just two weeks of sales and 35 faulty phone batteries so far, Samsung issues a global recall and promises to replace every unit already sold.
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The company's flagship device has been on sale for just two weeks. Samsung said Friday that it has sold 2.5 million of the phones worldwide to date.
The recall comes at a critical time for Samsung, as Apple prepares to unveil its latest iPhone on Sept. 7. If the battery problem persists, it could threaten the momentum Samsung has enjoyed over the last few months, fueled by the success of the Galaxy S7. With the well-received launch of the Note 7 last month and the Gear S3 smartwatch at the IFA trade show this week, Samsung was starting to get its swagger back.
"There's definitely damage done and the whole incident is detrimental to Samsung's image," said IDC analyst Tay Xiaohan. "The level of damage will depend on how Samsung addresses this issue quickly and solves the problem."
Samsung received 35 separate reports worldwide tied to what it described only as a "battery cell issue." It's working with suppliers to root out other "affected batteries" in the market.
In recent days, South Korean social media had seen a spate of people posting images of charred Galaxy Note 7 devices, claiming they'd overheated or exploded.
The company is also voluntarily replacing every Note 7 already in the market "over the coming weeks." Further details on the recall and on the replacement program aren't yet known.
This isn't the first time Samsung has had trouble with its Note line. Last year, customers complained of a design flaw in the Note 5 that led to problems when the phone's stylus was inserted the wrong way.
Samsung's Galaxy Note 7 tackles a day at the office
Other mobile recalls include the Fitbit Force activity tracker and Nvidia's Shield tablet. But few have been as high profile as the Note 7. Rival Apple stared down its own "Antennagate" crisis in 2010, when iPhone 4 users complained of losing signal due to the external antenna when the phone was held a certain way. Apple spent millions on a giveaway of iPhone cases or bumpers to customers, but never recalled the iPhone 4 despite early calls for the company to take action.
The Note 7 recall eclipses both these issues. And with 2.5 million Note 7 devices sold, replacing every phone sold will be a Herculean task and one that's expected to impact the company's bottom line.
Samsung will provide more instructions on the replacement process next week, but for now, the company is in damage control after pulling its hottest new phone from the shelves so quickly after launch.
The timing is bad, though.
Counterpoint Research analyst Tarun Pathak said Samsung has "lost the critical window of opportunity" where buyers consider upgrading from older models. In a matter of weeks, many may look to Apple's upcoming iPhone 7 instead, he said.
Here's Samsung's statement:
Samsung is committed to producing the highest quality products and we take every incident report from our valued customers very seriously. In response to recently reported cases of the new Galaxy Note7, we conducted a thorough investigation and found a battery cell issue.
To date (as of September 1) there have been 35 cases that have been reported globally and we are currently conducting a thorough inspection with our suppliers to identify possible affected batteries in the market. However, because our customers' safety is an absolute priority at Samsung, we have stopped sales of the Galaxy Note7.
For customers who already have Galaxy Note7 devices, we will voluntarily replace their current device with a new one over the coming weeks. Instructions on the replacement process will be shared next week.
We acknowledge the inconvenience this may cause in the market but this is to ensure that Samsung continues to deliver the highest quality products to our customers. We are working closely with our partners to ensure the replacement experience is as convenient and efficient as possible.
First published at 3:17 a.m. PT Update, 10:09 a.m. PT: Added the number of Galaxy Note 7 devices sold.