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Samsung has shipped more than 2.5 million units of the Galaxy Note 7 ever since this smartphone was released in the third week of August. The company is now having to recall those units because of a battery cell issue that Samsung has identified. It’s going to voluntary replace all Galaxy Note 7 units or give them full refunds if they no longer want to use the company’s latest flagship. Naturally, there’s a cost associated with this exercise, and while Samsung wouldn’t confirm how much it expects to spend on the recall the head of its smartphone business Dong-jin Koh would only say that it’s a “heartbreaking amount.” He made this comment when asked about the financial impact of the Galaxy Note 7 recall at a press briefing last week.
Analyst estimates compiled by Bloomberg suggest that Samsung is going to take a $1 billion hit on the Galaxy Note 7 recall. However, many hold the view that any short-term financial loss would be easier to bear for the company than any long-term damage to its brand. It’s easy for analysts to predict a dollar amount that will impact Samsung but only the market will dictate whether or not there’s any lasting damage to Samsung’s brand because of this recall. Some concerns have already been raised about the way Samsung is handling the Galaxy Note 7 recall but for its part, the company seems to be convinced that it would rather spend a billion dollars than try making excuses for an issue which could potentially damage its brand in the future.
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