Recall of Galaxy Note 7 likely to cost Samsung dearly

The Galaxy Note 7 was recalled after reports of its battery catching fire. Luke MacGregor / Reuters

Samsung's recall of its Galaxy Note 7 smartphones is expected to put a dent in the company's finances, especially with new smartphones from Apple due out on Wednesday.

“The iPhone 7 and iPhone 7 Plus models are expected to be big upgrades,” said Sahil Mohan Gupta, a smartphone analyst at pcmag.com.

Samsung said it has given itself a two-week deadline to start replacing Note 7 phones.

"One really doesn't know when the Note 7 will actually come back," Mr Gupta said. "If it were to take as long as a month then that would be disastrous for the company as not only Apple will be out, chances are that would be close to the launch of the new Google phones." The Note 7 was only launched on August 19 in 10 countries including the UAE.

Samsung’s stock was initially hit before rebounding to close up 0.6 per cent on the Korean stock exchange on Friday.

However, Mr Gupta said that may not be the case over the next days and weeks. “Apple is expected to blunt out the technological edge that Samsung has built up in the last few years in terms of cameras, displays, design and overall feature set. Samsung should be worried about this,” he said.

Samsung said it has already sold 2.5 million Note 7s globally. Retailing at Dh3,122, that alone would equate to a base cost to Samsung of almost Dh8 million, a figure likely to be much higher with the inclusion of phones in transit and in stock.

“It will cost us so much it makes my heart ache. Nevertheless … what is most important is customer safety,” said Koh Dong-jin,the president of Samsung’s mobile busines.

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