It’s the worst nightmare of any technology executive: an order to stop manufacturing your hottest new product because of a strong risk it could explode. That’s the reality faced by Samsung after multiple reports emerged recently that its newly released Galaxy Note 7 smartphone exploded during charging or use. The product has been recalled, but now the company faces the financial and technological consequences. So what’s next for Samsung?
“Explosive” Developments
After initial reports starting coming out about the phone explosions, some people began to question their validity, but it seems undeniable that Galaxy Note 7 phones have actually caught fire spontaneously, both while in use and while charging. As of September 1, at least 35 customers in the U.S. and Asia reported exploding batteries. The fires have ranged from small to quite major—at least one car and a garage were set on fire from the phone in separate incidents.

A few isolated occurrences soon grew into larger warnings—the FAA and other international aviation organizations soon started advising passengers not to turn on or charge their Galaxy Note 7 phones while on a plane because of the potential fire risk. In the wake of the reports, the U.S. Consumer Product Safety Commission told customers to stop using the Galaxy 7 immediately and to power it down. There is now an official recall for the Galaxy Note 7, which was released just weeks ago. Other Samsung phones aren’t affected by the battery issue.
The explosion boils down to the fact that a phone battery is designed to store as much energy as possible, which makes it volatile by nature. Although batteries are designed to regulate the amount of energy that is released, a manufacturing defect apparently caused the Galaxy Note 7 battery to release all of its energy quickly, which can potentially start a fire.
Steps for Phone Owners
If you own a Galaxy Note 7, the first thing you should do is power down the phone. The company’s statement is blunt: “Our number one priority is the safety of our customers. We are asking users to power down their Galaxy Note7s and exchange them as soon as possible.”
After turning it off, take the phone back to wherever you bought it, where you can replace the phone with a temporary loaner until the new Galaxy Note 7 with an improved, non-exploding battery is ready. If you’re ready for a different phone, you can trade in the Galaxy Note 7 and get credit for the difference in price. Samsung is also apologizing by giving customers a $25 gift card or statement credit.
Samsung’s Future
Although there have been relatively few actual incidents of battery explosions, the issue is still a complete disaster for Samsung. The Galaxy Note 7 was supposed to be Samsung’s response to the iPhone 7 and give the company a boost to fight against powerhouse Apple going into the holiday buying season, but now it has effectively taken itself out of the competition.
The device is packed with innovative features and a sleek design, but that has all been overshadowed by the battery issue. It’s too early to tell, but Samsung sales are surely to be affected by the incident. Many experts are also predicting that sales across all Galaxy-branded products will drop, even though the issue is isolated to the Note 7. Without considering lost sales, the recall and replacement alone is expected to cost Samsung $1 billion.
Aside from sales, there’s also the major public relations hurdle to deal with—no matter what Samsung does, the Note 7 will likely always be remembered as “the exploding phone.” While Samsung’s message to turn off all Note 7s is a safe decision and helps it avoid future issues, the message can also be perceived that the risk is higher than it actually is, which can cause customers to overreact and leave behind Samsung phones completely. In a world where information spreads lightning fast and things can quickly be taken out of context, Samsung runs the issue of facts changing via word of mouth and social media.
Samsung’s future is unknown, but the issues it has to take on and recover from seem clear. With such a disastrous event, the company has a long way to go before it can compete with other smartphone producers. However, the company’s relatively quick response could be its saving grace. We’ll have to wait and see how large the financial and PR effects are for the company and if it can wake up from this nightmarish event.