Why Samsung can't afford to make any more mistakes

Let's hope they can get it right this time around...

Samsung is a company which has a lot going on at the moment.

At Mobile World Congress in Barcelona on Sunday it announced a trio of new tablets/laptops; a new version of the Gear VR with a controller; as well as a suite of products to cater for the upcoming move to 5G. It also teased the launch of the Galaxy S8, the company's flagship smartphone for 2017, which will be unveiled next month.

However away from the show floor, there is even more going on.

Its top executive — and heir to the entire chaebol — Jay Y. Lee was arrested last week on allegations of bribery, perjury and embezzlement. Bloomberg reported that the arrest “jeopardises the executive’s ascent to the top role at the world’s biggest smartphone maker” but for the company, the fallout could be much more significant.

Samsung is one of the most recognisable brands in the world. It is the world’s biggest smartphone maker and has been for the last five years or so, capitalising on a consumer revolution the size of which has never been experienced before.

But, Samsung is much more than just smartphones. It also sells home appliances, VR headsets, televisions, laptops, tablets, cameras, wearables, speakers, headphones and many other consumer electronics. It also sells the parts that make up these products, including screens, chips and memory. It even sells chemicals... And ships.

Whatever way you look at it, Samsung is a huge company — and that is why controversies like Lee’s arrest could be so damaging.

But that is not the only thing that Samsung has to deal with at the moment. The company is still trying to recover from the disastrous Galaxy Note 7 exploding battery debacle, which not only cost the company upwards of €5 billion, but has substantially damaged its reputation among consumers.

In this year’s Harris Poll, a ranking of the reputation of the top 100 most visible companies in the U.S., Samsung ranked 49th — in 2016, the company was ranked 7th.

In an attempt to reassure customers, Samsung created a new ad which shows the rigours its smartphones go through before being sold. This is very much like trying to put the genie back in the bottle. Everyone knows your phone burst into flames, telling them you tested it beforehand is not going to make a difference.

The reason for the ad of course is not to try and convince people that its last phone was safe, but to reassure them that its next big phone will be safe. 

That next big phone will be the Samsung Galaxy S8, which will be launched next month and will reportedly feature top-of-the-line features including the latest processor and the curved screen when has so enamoured customers in recent years.

However, all of that will mean nothing if Samsung cannot convince people that the phone is safe. Every report of an exploding phone — however spurious — will now be picked up by the media and investigated — even if they all prove groundless, the attention alone will be damaging. The company simply cannot afford for any stories about exploring or burning Galaxy S8s to take hold.

As we have seen, Samsung is a company with a lot of fingers in a lot of pies, but at the heart of it all is the smartphone. While the company will likely be able to overcome the Galaxy Note 7 debacle, another similar controversy — this time impacting its flagship phone — would likely be fatal.

The damage to the company's reputation alone from such an incident would have a domino effect and impact the rest of the company’s products. While the bulk of Samsung’s smartphone sales come in the mid-to-low end of the market, having a second exploding phone would tarnish the entire brand and put the company’s position as the world’s biggest smartphone company under threat.

 

Samsung was at pains to reassure potential customers on Sunday that their battery technology was OK and that there is nothing to worry about in terms of safety with any new product — but such a call should sound fairly familiar.

Oh yes, when Samsung recalled the initial batch of faulty Note 7 smartphones, they said the new phones they were sending out as replacements were perfectly safe. Just days later, fresh reports of exploding smartphones proved that wasn’t really true.

For Samsung’s sake, let’s hope this time around, they get it right.