Apple is unveiling new iPhones next week.
There’s no good time for a massive product defect, but the timing of the Galaxy Note 7 recall is especially unfortunate.
First, Samsung had been on something of a roll this year, having seen strong sales of the Galaxy S7 introduced earlier this year as well as supremely positive reviews for the Note 7.
Second, Apple is introducing new iPhones next week. Samsung had moved up the Galaxy Note launch from prior years in an effort to build momentum ahead of its chief rival.
It’s too soon to say how much the recall will cost Samsung, but it is likely to be a hefty sum. First, it must replace the million or so phones already sold. Plus, it is likely to have to absorb some of the costs that retailers and carriers face in making things right for customers.
But the biggest cost could be the lost momentum in the highly hit-driven smartphone business. It will be worth paying close attention to how well the Note 7 does when it goes back on sale.
Samsung is still in the early stages of executing the recall, with the phone maker and cellular providers scrambling to deal with the logistics of halting sales of a major device as well as replacing that many phones.
It says it has identified the battery flaw responsible for the issue, which it says is linked to 35 reported issues, including phones exploding or catching on fire.
Samsung had been counting on the Note 7 to keep things rolling in its high-end phone business, which is the most profitable part of the mobile business.
“Looking into the third quarter, the release of a new large-screen flagship smartphone will help to maintain solid sales of high-end smartphones,” Samsung said in its July earnings report.
The Note series is one of two key products for Samsung’s phone business, along with the Galaxy S line.