Samsung is stepping up its brand damage limitation efforts in the wake of the flaming battery disaster of the Galaxy Note 7 smartphone by offering owners of the recalled device in South Korea the ability to upgrade to a Galaxy S8 or Note 8 device next year if they trade in their Note 7 for a Galaxy S7 now.
The offer implies Samsung is not in fact intending to retire the Note brand name for good, despite it now being associated with smoldering batteries and exploding smartphones.
A cause for the battery overheating problem, which affected some replacement Note 7 devices as well as a number of original devices, has yet to be conclusively identified by the company.
Users in its home country who opt for the upgrade program will only need to pay half the price of a Galaxy S7 in order to exchange to an S8 or Note 8 next year — so they’re being offered next year’s flagship Samsung phablet at around half price. The company is presumably hoping brand loyalty to the Note can begin at home, although it’s possible it might extend the offer to other markets.
Samsung said the upgrade program’s availability elsewhere will be dependent on the situation in each country, according to Reuters. Presumably the company will be doing a lot of sentiment analysis to figure out whether to expand the offer or not.
Earlier this month, the day after announcing it would be ending production of the Note 7 for good, Samsung revised its earnings guidance for Q3 2016 — saying it was now anticipating 47 trillion Korean won in revenue and 5.2 trillion Korean won profit (down from earlier guidance this month when it said it was expecting 49 trillion Korean won in revenue and 7.8 trillion Korean won profit).
Analysts have estimated the permanent shuttering of Note 7 sales could cost the company up to $17 billion. But Samsung is evidently keen to try to limit brand damage to the Note brand — which it introduced in 2011, ushering in a successful run of phablet-sized smartphones and encouraging other smartphone makers to supersize handset screens.
Killing the Note 7 was a major step. But it looks like Samsung is not yet prepared to kill off the Note name entirely.
As well as an upgrade program aimed at encouraging brand loyalty, Samsung has also been offering financial incentives to Note 7 owners not to abandon its devices.
In South Korea Samsung it offers Note 7 owners 100,000 won (~$88) to exchange a Note 7 for another Galaxy device. While in the US Note 7 owners are offered $100 if they exchange their recalled device for another Samsung-branded handset.