SEOUL: Samsung
said Wednesday it was doing its best to push through a challenging recall of
its Galaxy Note 7 smartphones, as it offered a software fix to jolt users into
returning defective devices.
The success of
the recall is seen as crucial to Samsung retaining brand trust and loyalty and
preventing customers defecting to arch-rival Apple´s new iPhone 7 or cheaper
Chinese-made models.
The South
Korean electronics giant moved quickly earlier this month to suspend sales of
its latest large-screen smartphone and announced a recall of 2.5 million units
already sold, after faulty batteries caused some handsets to explode during
charging.
Samsung had
advised consumers in 10 countries to trade their handsets for temporary
replacement phones provided by the firm until it releases new Note 7s.
But many users
have snubbed the offer, choosing to wait until the new phones were available,
citing the inconvenience of switching devices for an interim period.
And different
regulatory practices in different countries -- as well as varying reactions
from carriers -- have caused a degree of customer uncertainty and confusion
that is hampering Samsung´s efforts to get the recall behind it as quickly and
painlessly as possible.
- No overnight
fix -
"It´s not
something that can be done overnight," said a Samsung spokeswoman.
"The
process is different for each country because they have different regulations
and we also have to talk with the carriers in those countries," she said.
In an effort to
steal a march on Apple, the Note 7 was given an early launch in the key US
market, making that a priority for the recall effort.
Samsung is
working with the US Consumer Product Safety Commission, but has yet to provide
a specific date for replacing returned units.
"We would
like the consumers to receive their new phones quickly and easily but the
situation is different for each country and we are doing our best in the given
circumstances," the Samsung spokeswoman said.
In a half-page
advert carried by major South Korean newspapers on Wednesday, Samsung announced
a Note 7 software update that will limit battery recharges to 60 percent of
capacity.
It would
prevent the phones from overheating, and thus exploding, but would effectively
mean a downgrade of the high-end device -- and therefore an incentive to turn
it in.
The automatic
update for South Korean users will take place on September 20, a day after
Samsung begins to hand out new Note 7 handsets with fault-free batteries.
- ´Deep´
apology -
Wednesday´s
newspaper ads also carried a message of "deep, sincere apology" and a
vow to retain the "love and trust" of Samsung consumers.
The recall
comes at a particularly sensitive time, with Samsung´s mobile division finally
showing some real momentum after two years of profit growth declines in an
increasingly competitive and saturated market.
The degree of
long-term damage is still difficult to estimate.
"The
company has acted aggressively to address the problem ... (but) the recall is
likely to reverse improving profitability in Samsung´s IT and mobile
communications segment over the next one to two quarters," credit ratings
agency Moody´s said in a statement.
The statement
noted that the newly launched iPhone 7 smartphone could provide a tempting
alternative to disgruntled Samsung consumers, and said the Korean firm might be
forced to increase marketing expenses to regain consumer confidence.
The mobile
business accounts for a major share of profits at Samsung, which is the world´s
largest smartphone maker but also produces home appliances and memory chips.
Nomura has cut
its profit forecast for Samsung´s mobile division in the third quarter by 900
billion won (800 million dollars) to 3.1 trillion won.
"Nevertheless
we are still positive on the company´s mid-long term competitiveness and
earnings forecast mainly due to semi-conductor and display
competitiveness," Nomura said in a research note.