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Samsung’s Galaxy Note7 Assembly Lines Grind to Halt

Samsung has stopped production of its problematic Galaxy Note7 smartphones, according to multiple press reports Monday.

The company had been offering replacements of the phone after issuing a recall due to defective batteries, but all four major carriers have stopped doing so, presumably because several of the replacements exhibited similar problems, including smoking and catching fire.

Two replacements have malfunctioned, according to widely publicized accounts. One began crackling and smoking on board a Southwest Airlines plane,leading to the evacuation of the flight. The other emitted thick smoke, sending its owner to the hospital.

Samsung has been working diligently with authorities and third-party experts to address the problems, the company said, noting that the number of reported incidents is small.

Fallout From the Fires

“The fact no one has died is just lucky,” said Paige Arnof-Fenn, CEO of Mavens and Moguls.

“The replacements aren’t working,” she told the E-Commerce Times. “Samsung can’t risk things getting worse and people hurt. Customers have great options in this category, and Samsung’s not the only game in town. They need a clean slate — a fresh start to begin winning back trust.”

The United States Consumer Product Safety Commission is looking into the issue, as is the U.S. Federal Aviation Administration.

Meanwhile, the replacement program appears to have been aborted.

“While the investigation’s under way, Verizon is suspending the exchange of replacement Note7 smartphones,” said Verizon Wireless spokesperson Kelly Crummey.

“We are also not selling Note7 smartphones at this time,” she told the E-Commerce Times.

Verizon will refund the difference to customers who exchange the Note7 for a less expensive device, or ask them to pay the difference if the new device costs more than the Note7, Crummey said.

They have to bring the device back to the original point of purchase — a box store such as Best Buy if they got it there, Crummey noted. Verizon’s online customers may exchange their Note7s at Verizon stores.

Sprint “is halting sales of replacement Note7 devices pending the conclusion of the investigation by the [CPSC],” said company spokesperson Michelle Mermelstein.

“If a Sprint customer with a replacement Note7 has any concerns, we will exchange it for any other device,” she told the E-Commerce Times.

T-Mobile has suspended all sales of new Note7 phones and exchanges for replacement Note7 devices. Customers who purchased a Note7 from T-Mobile can return their recalled or replaced phones, along with all accessories, to one of the company’s stores. They will get a full refund and can choose another device from any in its inventory.

In addition, T-Mobile will give customers who return recalled Note7s a one-time US$25 credit on their T-Mobile bill. T-Mobile customers who purchased Note7s through pre-orders can keep the free Netflix subscription and Gear Fit or SD card they received, T-Mobile said.

AT&T did not respond to our request to comment for this story.

Samsung’s Next Move

Samsung should come clean, recommended Mavens and Moguls’ Arnof-Fenn. “Do not spin this or try to minimize for damage control. They cannot slow down the news cycle.”

The Note7 problem is reminiscent of the Johnson & Johnson Tylenol crisis, Arnof-Fenn said.

However, that was a case of multiple murders committed through deliberate tampering. Seven people died after someone laced Tylenol capsules with potassium cyanide.

“J&J is a trusted brand today,” Arnof-Fenn pointed out.

“Martha Stewart is back too,” she added, referring to Stewart’s conviction in a stock trading case. “Consumers love a good comeback story.”

Samsung “need to come back with a great new product that works as promised, [or] their market cap is gone and their name is worth nothing,” Arnof-Fenn remarked. “Brands stumble and people make mistakes. It happens. It’s not the screw-up that will kill you — it’s the cover-up.”

Richard Adhikari

Richard Adhikari has written about high-tech for leading industry publications since the 1990s and wonders where it's all leading to. Will implanted RFID chips in humans be the Mark of the Beast? Will nanotech solve our coming food crisis? Does Sturgeon's Law still hold true? You can connect with Richard on Google+.

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