Not so long ago we have discussed as the Samsung Galaxy Note 7 as the best phone that ever made but just a few weeks the mighty have fallen and is now on its knees. Almost, everyday we hear news about the Note 7 exploding like this very last one from Australia.
The company will surely pay the price and it is not cheap. Experts say it will cost the company around $1 Billion just to fix the mess they made.
How big is the damage?
Samsung issued a total recall of all the phones that has been bought and in-stock. Which means if you have one now, it time to give it back before new year comes early in the expense of your Note 7. The figure we are talking about is around 2.5 million Galaxy Note 7 devices worldwide. Most of the experts say that the company will be losing $1 Billion, $900 is the estimated cost of each handset to return it plus the profit of the company on that device.
Profits and losses
Samsung is expected to earn $108 for each Samsung Galaxy Note 7 sold and is expected to earn around 9 million before the year ends according to Credit Suisse.
Below is the details from AndroidAuthority.com:
Samsung would have gain around $864 to $972 million, so the recall will likely wipe out all of the profit that Samsung was hoping to generate from the Note 7 this year. While this sounds like a lot, the $1 billion costs would only account for less than 5 percent of Samsung’s total projected net income of 23 trillion won ($20.6 billion) for the year.
There’s not just the recall costs to worry about though, the shipment halt is eating into important early sales and reducing Samsung’s launch advantage over its main rival, Apple’s upcoming iPhone 7. Even if Samsung increased its production output by 20 percent, the company is now very unlikely to be able to meet consumer demand and replace all of its 2.5 million units in a timely fashion, leading to constricted supply. If Samsung’s Galaxy Note 7 misses its sales target as a result, there will be large knock on effects for Samsung’s battery, display and semiconductor businesses, which all supply components for the handset.
The company was on a roll after the good sales of the Galaxy S7 but this disaster of the Note 7 will be huge as for sure they won’t be able to compete against Apple’s iPhone 7 to be unveiled this week.