Samsung’s Smartphone Recall Is Big But Far From Worst in History
Samsung Electronics Co.’s recall of its fire-prone Galaxy Note 7 smartphone will be one of the biggest recalls ever in the technology industry. The South Korean conglomerate pulled the plug on the entire product line and slashed its third-quarter profit forecast by $2.3 billion.
On a 10-point scale measuring financial and reputational damage to a company, Samsung’s recall ranks between 4 and 7, said Srinivas Reddy, director of the Center for Marketing Excellence at Singapore Management University who has researched product and brand failures. That’s because the exploding phones — while still “a calamity” for the company — haven’t killed anyone, Reddy said.
“The threat for Samsung is how soon they can get back,” Reddy said. “If they don’t get back soon, it provides a vacuum for others to creep in.”
In a marketplace where everything from cars to cows can have deadly defects, Samsung’s product failure is far from the worst in history. Merck & Co.’s 2004 scandal with its drug Vioxx — which studies showed could increase the chance of heart attacks and strokes in some patients — was a “catastrophic disaster,” rating a 10 on Reddy’s scale. Payouts from lawsuits and government investigations tallied more than $8.5 billion.
Other notorious recalls include:
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