Samsung reveals results of fire phone investigation, not everyone impressed

IDC New Zealand analyst Chayse Gorton says Samsung can overcome the “publicity issues” involved with the recall, thanks in part to proactive measures such as giving Note 7 owners free J5 phones and $100 "stress payments" to affected customers. He expects a comeback for the current quarter.

But he says the company still faces the wider challenge of increasing competition in the Android market from Huawei and others.

As for financial impact, on January 5 Samsung forecast it would make a fourth-quarter profit of $US7.8 billion. Analysts say the conglomerate's booming chip sales have offset the impact of the Note 7 fiasco (Samsung does not break down its forecast by division).

Battery A had a defective part on the upper-right corner of the "jelly-roll", which resulted in a deflection of the electrode and weakened the separator between the two electrodes, creating multiple paths for a potential short circuit.

Battery B had melted copper on the negative electrode area facing the positive tab, indicating a short circuit had occurred in that location.

"In addition to our own investigation into these incidents, we also retained independent industry expert organisations, including UL, Exponent and TUV Rheinland, to provide objective, unbiased analysis," the statement adds.

Samsung executives met government officials in Washington DC last week to discuss the findings and got a positive reception, according to a Wall Street Journal report (this afternoon the Journal gave Samsung a C grade for its explanation, saying "After four months of testing on over 200,000 phones, what did Samsung Electronics Co. determine caused its flagship Note 7 to catch fire? Bad batteries. Two separate sets of bad batteries made by two different companies, in fact. That’s like a meteor striking your house – twice.")

New safety measures
The company says it has also introduced new safety measures including an expanded "eight-point battery safety check" that adds new measures: a charge/discharge test (powering a completed phone up or down), looking for battery leakage, and accelerated usage or simulating two-weeks use in five days.

Click to zoom (supplied)

Samsung has also created a panel of external advisers, academic and research experts, which it says will hep it keep "a clear and objective perspective on battery safety and innovation."

Long-term brand impact
Samsung is obviously keen to draw a line under the incident but it's too soon to long-term impact on its brand.

IDC New Zealand's most recent market survey showed a dip in Samsung's fortunes for the period including the Note 7 flameout.

Third-quarter shipment figures from the independent market researcher have Samsung at 36% share (148,000 units), compared to 43% (193,000) in the third quarter of last year. 

By holding steady with 97,000 iPhones shipped between July and September (compared to 96,000 for the same period last year), Apple boosted its share from 21% to 24%.

Huawei also made hay. The Chinese smartphone maker – which sells Android phones from the low-end to the high – was the biggest mover in IDC's July-September survey, moving from 6% (25,000 units) in the year-ago quarter to 17% (69,000).

Global stats have followed a similar pattern.

IDC New Zealand analyst Chayse Gorton says Samsung can overcome the “publicity issues” involved with the recall, thanks in part to proactive measures such as giving Note 7 owners free J5 phones and $100 "stress payments" to affected customers. He expects a comeback for the current quarter.

But he says the company still faces the wider challenge of increasing competition in the Android market from Huawei and others.

As for financial impact, on January 5 Samsung forecast it would make a fourth-quarter operating profit of $US7.8 billion, which if it comes in on target will be its best quarter since 2013. Analysts say the conglomerate's booming chip sales have offset the impact of the Note 7 fiasco (Samsung does not break down its forecast by division).