Product recalls aren’t cheap, and they’re especially painful when they happen to major launches. Unfortunately for Samsung, they’re not the exception to that rule. While the company is still in the process of getting the returns and exchanges set up for customers, this entire process will probably cost Samsung close to $1 billion to rectify things.
The good news (for Samsung, at least) is that they’re an extremely large company, so a billion dollars won’t bankrupt them. That amount hurts, but it won’t break the company. The biggest concern for Samsung going forward is if this debacle will hurt the Galaxy brand that they’ve been cultivating for years and years, which makes sense considering how extremely competitive the smartphone market is. Recalling millions of smartphones is a very quick way to lose consumer trust, although keeping those phones out in the wild where they could potentially injure someone or damage some property is obviously even more damage. There’s no way for Samsung to win this situation, so mitigating damage is their priority.
Samsung’s brand image really peaked with the Galaxy S3 before dipping each year with each newer model. The Galaxy S7 finally seemed to turn that around with glowing reviews and solid sales, and everyone expected them to keep that momentum going into Q4 with the fantastic Galaxy Note 7. Now while Samsung is in damage control mode, Apple is going to announce and launch their yearly iPhone iteration. The iPhone is always tough to compete against, and playing with a handicap only makes it that much harder for Samsung.
The bright side is that Samsung is handling the situation quickly and effectively, even if it’s going to cost them more money in the short-term. Knowing that a company will quickly correct an issue with their flagship device should help people buying Galaxy smartphones after this has blow over.