Bloomberg.com is reporting that it has found that all of the problems with the Galaxy Note 7 catching fire stem from the company [Samsung] trying to get the phone out before Apple introduced its new iPhone 7.
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According to Bloomberg:
The top brass at Samsung Electronics, including phone chief D.J. Koh, decided to accelerate the launch of a new phone they were confident would dazzle consumers and capitalize on the opportunity, according to people familiar with the matter. They pushed suppliers to meet tighter deadlines, despite loads of new features, another person with direct knowledge said. The Note 7 would have a high-resolution screen that wraps around the edges, iris-recognition security and a more powerful, faster-charging battery. Apple’s taunts that Samsung was a copycat would be silenced for good.
This idea, of course, backfired.
It was after the launch that the company started getting reports of the fires. To make matters worse, Samsung delayed recalling the phone until the U.S. Consumer Product Safety Commission got involved.
“This is creating an enormous problem for the company — for its reputation and ability to support its customers when there’s a problem,” said David Yoffie, a management professor at Harvard Business School and board member at Intel.
The fires and explosions were traced to faulty lithium batteries. As engineers worked to identify which of the company’s multiple battery suppliers were responsible, further embarrassment was added when it turned out that it was the batteries made by one of Samsung’s own subsidiaries – and not a third-party supplier – that were at fault.
The direct cost of the recall has been estimated at $2Bm and the financial impact may not end there. It’s believed that the issue has also led some to switch platform, from Samsung to Apple.
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