Exploding Note 7 may not affect Samsung too much

  • Samsung well ahead in smartphone units sold and innovation
  • Recall limited by virtue of Note 7 shipments yet to fully take off globally
Exploding Note 7 may not affect Samsung too much
 

SAMSUNG is in the news again, but not quite as the company had hoped for. In case you have not heard the news (and for DNA readers, that would be highly unlikely), the South Korean giant has suspended sales of its brand new high-end Galaxy Note 7 smartphone and issued an apology. The company initially offered replacements for anyone who has already purchased one, but as of yesterday evening had expanded it to a global replacement programme.

According to Samsung, there are 2.5 million units in the hands of users and carriers which typically bundle the phone together with subscription packages.
 
In a press release, Samsung confirmed that, as of Sept 1, it had found 35 such cases and the phones exploded while charging. Mobile phone networks around the world including some in the UK have delayed the launch of the Note 7.
 
This comes just two weeks after the company stock reached new heights with a market cap of US$210 billion (RM859 billion).
 
As one would expect, users on social media have gone into a frenzy about the exploding smartphone. In the video below, you can see a YouTube user named Ariel Gonzalez showing off his partially melted phone.
 

 
The company estimates the number of phones with the faulty battery accounts for “less than 0.1%” of the products available. If this is true, it is unlikely to have a long-term impact on the company's stock price or revenue prospects.
 
There are also other reasons for this. Despite a flattening smartphone market, Samsung itself is in a good spot. According to IDC, Samsung ships more smartphones each quarter than any other manufacturer in the world. In Q2 of this year, the company shipped 77 million smartphones, pushing Apple into a distant second place with 40.4 million units. For Samsung, this was an increase of about 4 million units. At the same time, Apple's shipments decreased by 15 percent.
 
Also, in many countries, the Galaxy Note 7 ships as part of the mobile subscription. Many mobile carriers are yet to offer the new devices to their subscribers. Therefore, at least in terms of the shipment numbers for the next quarter, the voluntary recall of the Note 7 should have little effect.
 
Another reason why Samsung is flying high these days is that the company has well and truly overtaken Apple in the realm of product innovation. For a couple of generations now, Samsung's smartphones have had better specifications and performance than the company's American rival. While Samsung's high-end devices boast better quality screens, higher screen resolutions, superior camera sensors and performance, it seems as if the company that invented the smartphone has stopped innovating.
 
If internet rumours are to be believed, Apple's upcoming iPhone 7 is not going to be a game changer. So the current saga of the exploding Galaxy Note 7 is going to be just a small cloud on Samsung's horizon.
 
This is hardly the first time that a modern consumer device has gone up in flames due to its battery. For more than a decade now, there have been stories and periodic recalls of devices with Lithium Ion batteries such as laptops. See the video below for a demonstration of what happens when the battery overheats.
 

 
Lithium-ion batteries are the workhorses of modern day gadgets. They are found in everything from smartphones to jumbo jets. Made with two layers of material called the anode and the cathode, separated by an electrically conducting fluid, the ions start off in the cathode. The batteries typically come in cells. A laptop battery may have three or four cells, while a Tesla Model S may have thousands.
 
Batteries can blow up or melt when electrical components short circuit or when mechanical problems crop up after an accident, or when they are installed incorrectly. Internally, all of these failures occur because one portion of the battery gets too hot and cannot cool down quickly enough, creating a chain reaction that generates more and more heat.
 
See the video below for a more scientific look at what happens during a runaway chain reaction.
 

 
At the moment, the energy density of Lithium Ion batteries are increasing at about five percent every year. With the consumers demanding longer life spans for their devices, the manufacturers like Samsung are under constant pressure to increase charge density.
 
The chart below shows the increasing charge densities of rechargeable batteries in the automobile space.
 

Exploding Note 7 may not affect Samsung too much
 

 
With the demand for more power and longer life continuing to remain strong, it is likely that we will continue to periodically hear stories of exploding batteries.
 
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MasterCard gets on board Samsung Pay
 
New consumer version of Samsung Gear VR rolls out in Malaysia
 
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