Samsung’s hopes go up in flames

Samsung's handling of the Galaxy Note 7 fiasco has been a disaster for the company, says Ben Judge.

Samsung is the world's biggest seller of mobile-phone handsets, boasting a market share of over 22% in the second quarter of 2016, according to research firm Gartner more than twice Apple's market share. It has carved out a position as a high-quality brand whose products sell for a premium price. Now that brand is under threat.

Its top-end phone, the Galaxy Note 7, which retails in the UK at over £700, developed a worrying tendency to burst into flames. The firm recalled 2.5 million handsets in September, but phones shipped to replace the faulty units also burst into flames. So on Tuesday, Samsung took the drastic step of halting production and taking the device off the market.

The saga has been a disaster for Samsung $21bn was wiped off its share price earlier this week, and the company says pulling the Note 7 could hit profits by $2.3bn. Its ambitions to rival Apple in the smartphone market "suffered a deep blow", says Jung-a Song in the Financial Times. And the fact that the firm replaced defective handsets with ones that were still unsafe "could trigger a large loss of faith in Samsung products", says Richard Windsor from Edison Investment Research, quoted on

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"Expect others to capitalise on the opportunity," says Dan Gallagher in The Wall Street Journal. Chinese firms such as Huawei were already setto take Samsung on. Another winner could be Google, which has just launched its own top-end handset, the Pixel. "Google's record in hardware has never been stellar," but this time it may havegot lucky.

Ben Judge

Ben studied modern languages at London University's Queen Mary College. After dabbling unhappily in local government finance for a while, he went to work for The Scotsman newspaper in Edinburgh. The launch of the paper's website,, in the early years of the dotcom craze, saw Ben move online to manage the Business and Motors channels before becoming deputy editor with responsibility for all aspects of online production for The Scotsman, Scotland on Sunday and the Edinburgh Evening News websites, along with the papers' Edinburgh Festivals website.

Ben joined MoneyWeek as website editor in 2008, just as the Great Financial Crisis was brewing. He has written extensively for the website and magazine, with a particular emphasis on alternative finance and fintech, including blockchain and bitcoin. As an early adopter of bitcoin, Ben bought when the price was under $200, but went on to spend it all on foolish fripperies.