The global Note 7 recall is a very real disaster for Samsung. There’s an immediate cost to destroying all those smartphones, but the bigger question is what the long-term damage will be for the company. Some experts are suggesting that this will be a massive blow to the brand and its reputation, but according to the companies actually selling phones, that isn’t happening yet.
Sprint CEO Marcelo Claure told Recode that most of the customers returning Note 7s “are basically switching to a Galaxy S7.” Much of that is undoubtedly thanks to the cash incentives Samsung is offering to customers who trade in their Note 7 devices for something else Samsung-made.
Recalls of products aren’t that uncommon, and if handled properly, don’t tend to cause long-term damage to the brand. The problem for Samsung has been the double recall: first, it pulled 2.5 million devices from shelves and asked customers to swap affected phones for ones with “safe” batteries. But that didn’t solve the problem, and after a number of highly public explosions (including on an airplane), Samsung was forced to admit it had no idea what was going on.
But Claure doesn’t think the double recall will affect Samsung too badly. “Even with this, they begrudgingly gave back their Note 7,” he said. “I’m a believer that Samsung will recover.”
Samsung is offering a number of incentives to try and keep users on its platform. In the US, buyers who return the Galaxy Note 7 and exchange it for a different Galaxy handset will receive $100 from Samsung in the form of a bill credit. The company is also offering $25 to anyone who turns in their Galaxy Note 7 for a different brand of phone, as a payout for the inconvenience.
The incentives are likely to add another big item to Samsung’s already-huge bill for this refund. But paying $100 in bill credit in order to retain market share (and sell more Galaxy S7 devices) is a genuinely small price to pay in the long run. It’s also bad news for Apple, which was expected to see a big bounce in iPhone 7 Plus sales from the Note 7 fiasco.