Samsung Galaxy Note 7 replacements commence in the UAE

by Ahmed Dubai
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Samsung Gulf Electronics has started replacing its Galaxy Note 7 devices in the UAE after receiving approval from the Telecommunications Regulatory Authority (TRA) and the Department of Economic Development (DED).

However, this news comes amidst an investigation underway of a Samsung Note 2 device that emitted smoke aboard an IndiGo flight over the weekend.

Exploding batteries and an embarrassing recall of a flagship gadget during a controversial, closely-watched leadership transition - it's been a bad year for Samsung, and analysts warn the trouble isn't over yet.

With ever-fiercer competition in the saturated smartphone market, South Korea's biggest firm is desperate to avoid a full-blown disaster that could cost billions, hammer its reputation and taint its new leadership.

Just weeks after the early roll out of the Galaxy Note 7 'phablet', the world's largest maker of smartphones was forced to recall 2.5 million units globally following complaints its battery exploded while charging.

"Samsung appears to have rushed fast to roll out the Note 7 with the iPhone 7 in mind... and it is paying a hefty price now," said Greg Roh, analyst at Seoul-based HMC Investment & Securities told AFP.

With images of charred phones flooding social media, the timing of the crisis could not be worse.

The Note 7 was meant to underpin growth this year as Samsung struggles to boost sales, squeezed by Apple in the high-end sector and Chinese rivals in the low-end market, as profit has stagnated.

One bright spot this year was the flagship handset Galaxy S7, which earned rave reviews and boosted operating profit to a two-year high in the second quarter.

The Note 7 was crucial to sustaining that momentum.

The recall, currently underway in 10 nations, could cost the firm $3 billion in the long run, some analysts say, while Roh warned the fallout could significantly hurt profit for months.

The crisis has also shaved $15 billion off its market value since late August, when the firm's share price hit the highest point so far this year.

While unconnected, Samsung said last week it had sold shares in four technology companies to free up money, in a move it said was "aimed at focusing on our core business".

Recall in the UAE

Samsung had earlier submitted three alternatives in agreement with the Ministry of Economy, with a fourth alternative activated by agreement between the two sides whereby a consumer would receive a new device from Samsung for temporary use until the arrival of the new devices.

The other alternatives included replacing the defective device with a new device of the same quality after reaching the UAE market before the end of September.

A second option included purchasing a second Samsung device, whereby the consumer bears the price difference if it was more expensive while the outlets would bear the price difference if the phone was cheaper.

The third option was receiving a full refund.

Damaged goods

As the recall threatens to drag on, it is unclear how long the crisis - and the risk of more explosions - would plague the firm, said Lee Seung-Woo, analyst at IBK Investment & Securities told AFP.

Since Samsung started rolling out replacements last week, half a million users in the US have exchanged handsets.
About a half of 420,000 South Korean users reportedly have done so, but some are complaining of delayed delivery of new phones.

While the financial hit will likely be huge, a bigger worry for the firm is the effect on the Samsung name, said Linda Sui, analyst at market research firm Strategy Analytics.

"In addition to material loss by revenue and profitability, potential damage on brand image and consumer confidence is even worse and hard to fix up in the short term," she said.

"The Korean giant is facing a tough time now," she said, warning of "falling fortune and tough competition" until it rolls out another flagship model next year.

Issues with other devices

A Samsung Note 2 phone emitted smoke and sparks on a flight from Singapore to southern India, the airline said.

The phone was found in the bag of a passenger in an overhead bin after other passengers reported smelling smoke in the plane, IndiGo said.

It said there was no fire but sparks and smoke were coming from the phone.

The crew used a fire extinguisher and then placed the phone in a container filled with water in a lavatory, the Indian airline said in its statement.

The aircraft made a normal landing at the Chennai airport and all passengers deplaned normally, it said.

The phone will be examined to determine the cause of the incident, the airline said.

The company said it had been informed of an incident in India with the Samsung Note 2, which uses a replaceable battery and was released in 2012.

"We are in touch with local authorities to gather more information and investigate whether there were any external factors involved," the company statement said.

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