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The Note 7 is dead: What Samsung must do now

Matt Hamblen | Oct. 12, 2016
Be transparent about what caused overheating, fires, analysts advise

"When cars have a recall, we don't all stop driving. However, Samsung needs to make sure they talk about the issue, so there's no doubt that the same problem might occur to other phones. This is absolutely key for them in order to the limit the damage," Milenesi said.

"This thing isn't done yet and if Samsung is completely transparent and if it doesn't happen again, then there's minimal long-term loss to the brand," Moorhead added. "If they don't do that, then the sky's the limit" about the loss to the brand.

Jack Narcotta, an analyst at Technology Business Research, speculated that Samsung itself doesn't know specifically what has gone wrong with replacement Note7s. "Until Samsung more clearly identifies the cause or causes, or literally has a smoking gun of a battery, it's going to be mum on telling the public exactly what's going on."

Moorhead said it is unlikely that the actual batteries were bad since two manufacturers' batteries have apparently overheated. One was Samsung SDI, which made the batteries for the U.S. original version and the other was Amperex Technology of China, which made the batteries for the original Note7s sold in China. When the Note7 replacement units were announced, the Amperex battery was used for the U.S., and yet some replacement units still smoked and caught fire.

Consider carefully the future of the Note line

Moorhead said he believes Samsung will actually come out with a Note8 in January or March. It will have the signature digital stylus that allows users to draw and take handwritten notes on the big 5.7-in. display.

Of course, it must be safe, and how Samsung communicates it will be safe is going to be tough. But no other phone maker will be able to create a relevant replacement of the Note device that quickly, Moorhead said.

Milanesi disagreed and said Samsung needs to come up with another name, since calling the next one a Note8 would just be a bad reminder of a smartphone that can catch fire in your pants.

Jack Gold, an analyst at J. Gold Associates, said Samsung shouldn't eliminate the Note form factor.

"It's a unique form factor with very limited competition," Gold added. "There's no reason a newly designed Note won't do well for them in the future. Apple doesn't have an equivalent device."

Moorhead conceded that the Note8 must have an obvious physical difference from the Note7, maybe a color change. "The Note brand is not destroyed if they handle it right," he added.

Even if Samsung rebrands the Note with another name, its larger screen and stylus will give it away, added Kevin Burden, an analyst at 451 Research.


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