Mobile

Why Samsung is sticking with the Galaxy Note 8

Despite the enormous baggage that comes with the Note name, Samsung believes loyal customers will flock back to a new Note.

Josh Miller
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At Samsung's 837 "experience store" in New York's trendy Meatpacking District, a few visitors lined up to try the company's virtual reality experience based on the action series "24." Others took in a latte and a comfy chair, surrounded by the latest phones and smartwatches.

The "store" -- it should be noted that you can't actually purchase items there -- is a boastful showcase of the latest and greatest tech from Samsung.

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The Galaxy S7 Edge, and not the Galaxy Note 7, is featured at the Samsung 837 "experience store" in New York.

Two floors above, Samsung's mobile chief, D.J. Koh, sat in a conference room on Thursday, flanked by his lieutenants. None was in the mood to brag.

Koh spoke with CNET ahead of Sunday's big how-it-all-happened press conference, going into detail about why the Galaxy Note 7 caught fire. In talking about the company's plans to rebuild its credibility with consumers, Koh confirmed that Samsung would bring out a successor to the Galaxy Note 7.

"I will bring back a better, safer and very innovative Note 8," Koh said.

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The Samsung 837 store lets people check out the latest and greatest from the company.

Roger Cheng/CNET

The decision is a risky move for Samsung, given the baggage the Note brand now carries. It's been the butt of countless jokes. For the past several months, airline attendants were required to say that Note 7 phones could not be carried on flights, even if they were powered off. The Note 8, which following previous years' precedent will likely debut this fall, will serve as a measuring stick for how much progress Samsung makes in the coming months.

"A lot is going to be based on the next great thing that comes out that's problem-free," said Thomas Cooke, a professor at Georgetown's McDonough School of Business.

To Koh, the Note garnered a group of devoted users he couldn't walk away from.

"We found through the investigative process, we knew there are lots and lots of loyal Note customers," he said.

Indeed, Samsung says its most loyal base of customers across all of its products (and it makes a lot of stuff) are those who've bought Note models. Just look at the thousands of Note 7 users still on Verizon -- the carrier has to take drastic action like routing calls to its customer service to get them to turn the devices in.

Globally, 96 percent of Note 7 buyers have traded in their phones. In the US, the official tally is 97 percent, but Tim Baxter, president of Samsung's US arm, says the volume of phones taken out of use is actually closer to 99 percent because more than half of the remaining units are no longer connected to cell networks. "We are pushing to get to that 100 percent," he said.

Beyond its loyal customers, Samsung is likely unwilling to give up one of the marquee pieces of its mobile portfolio. The company is often criticized as a fast-follower, mimicking the hot trends of competitors (read: Apple). But Samsung was the first to hit the market with a jumbo phone, and the Note brand endured years of ridicule before people started to warm up to the idea of a phone that can double as a cheese plate.

When you think big phones, you think Samsung first.

There's also a personal reason for Koh, who said that he and his team developed the original S-Pen stylus that is the signature feature on the Note line.

More than 10,000 Note customers have signed up to stay connected to Samsung for more updates, according to Baxter. He added that there is still a large base of Note 4 and Note 5 customers who are looking for an upgrade.

"They made it clear, they want a Note," Baxter said in the same interview.

Perhaps it'll be one that's finally worthy enough to appear in Samsung 837.

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