Samsung Reveals Cause Of Note 7 Issue, Turns Crisis Into Opportunity

Samsung Reveals Cause Of Note 7 Issue, Turns Crisis Into Opportunity

By Maribel Lopez, CONTRIBUTOR JAN 22, 2017 @ 08:10 PM

Samsung launched the Galaxy Note 7 to record preorders and sales in August, but the device’s fate didn't mirror its rosy start. Samsung had to initiate a recall of the first version of the Note 7 due to potentially faulty batteries in September. By October it had to recall over 2 million devices and discontinue the product. It's estimated that the recall will cost Samsung $5.3 billion.

Recalling a product is never easy, and yielding returns of more than 30 percent is extremely challenging. Samsung aggressively told the media its goal was a 100% recall. Less than three months later, the company has reached a 96 percent return rate globally.

LAS VEGAS, NV - JANUARY 04: Tim Baxter, President and Chief Operating Officer of Samsung Electronics America, speaks during a press event for CES 2017 at the Mandalay Bay Convention Center on January 4, 2017 in Las Vegas, Nevada. CES, the world's largest annual consumer technology trade show, runs from January 5-8 and is expected to feature 3,800 exhibitors showing off their latest products and services to more than 165,000 attendees. (Photo by Alex Wong/Getty Images)

Tim Baxter, CEO and president of Samsung Electronics America, Inc., called it one of the first digital recalls. The company sent text messages and emails to communicate the recall. Samsung also improved the volume and speed of returned units by working with telecom carriers to issue a software update that would disable the Galaxy Note 7’s charging abilities, rendering it useless as a phone. Since the recall was a safety issue, service providers agreed to distribute the update to dimish device charging.  And when the Department of Transportation (DOT) banned the Note 7 on airplanes, teams of Samsung employees were sent to airports to help consumers and collect the phones.

Koh: "We want to reinstate trust in the brand."

Mr. DJ Koh, President Mobile Communications Business for Samsung Electronics, said in an interview with industry analysts, “Technology innovation is important to Samsung, but our customer’s safety is more important. We want to reinstate trust in the brand." To regain trust, Samsung had to identify the root cause of the issues with the Galaxy Note 7 and apply these learning to future product designs. In a press conference held today in Korea, Samsung told the world what actions it was taking to remedy the situation as it announced the official results of a month’s long investigation into what went wrong with the Galaxy Note 7.

Samsung builds a test lab to find  the root cause of the Note 7's issues

In the last 120 days, Samsung built a new test lab. It staffed it with 700 researchers, 200,000 devices and 30,000 batteries in an attempt to replicate the cause of fires in the phones. It tested the whole device, including areas such as the role of wired and wireless charging as well as fast and normal charging. It also tested the water resistance, with and without the back cover.

Samsung tested other device features such as the USB-C charger and Iris scanner. It evaluated the software and algorithms tied to wireless charging. It even evaluated how third party applications were impacting the phone. Additionally, it worked with three independent third party test labs - UL, Exponent, and TUVRheinland - to assess issues across software, hardware, manufacturing, logistics and handling. The finding from Samsung tests and the independent labs revealed the same results.

Battery manufacturing issues led to smoking phones

What happened? In short, batteries from two different manufacturers had flaws. The principal root cause of the first manufacturer’s battery problem (Battery A) was negative electrode deflections. The second manufacturer's product (Battery B), suffered from abnormal ultrasonic welding burrs. (For more information on the flaws (see the infographic ) While the principal cause was different in each type of the battery, the result was the same. A small subset of batteries could overheat and potentially catch fire. It’s clear that the smartphone industry’s desire for ever thinner phones with longer battery life has strained battery manufacturing processes.

Samsung creates battery advisory group and designs an 8-point battery safety system

The company created a battery advisory group that includes leaders from various universities and specialized consultants. Battery Advisory Group members include:

Going forward, Samsung has a new quality assurance process that both Samsung and its component manufacturers must follow. It has implemented a multi-layer safety measures protocol at the product planning and a new 8-point battery safety system. This system includes:

Durability Test – Conducting additional durability tests, including battery nailing, stress testing with extreme temperatures and overcharging tests.

Visual Inspection – Visually checking the battery to compare it with samples confirmed to be in accordance with standardized criteria.

X-Ray Test – Running X-ray tests to inspect any possible battery issue such as a deflection of the electrode, which we found to be one of causes of the Note7 issue.
Disassembling Test – Disassembling the battery cell to perform a detailed check of the overall quality, including the battery tab welding and insulation tape conditions, which we found to be an issue with Note7.

TVOC Test – Performing a sensing test to detect leakage at the battery component and complete device levels.

ΔOCV Test – Inspecting the battery condition by checking voltage change in a normal temperature.

Charge and Discharge Test – Applying new large-scale charge and discharge tests to all devices, which we initiated with our investigation into the Note7 issues.

Accelerated Usage Test – Engaging in 2 weeks of real-life consumer usability scenarios, which we were able to shorten to a five-day test period.

Samsung will also contribute its learnings and processes for testing Lithium Ion batteries to various global standardization bodies. This act of goodwill also ensures that other smartphone vendors can request the same inspections. If the specifications were Samsung-specific, battery manufacturers might not adhere to the checklist.

What does this mean for the industry?

The smartphone recall sent shockwaves through the industry. Now that we have a definite answer to what went wrong, it’s clear that the recall will have both positive and negative consequences for the entire smartphone industry. Specifically,

Samsung customers will get better phones. The upcoming set of Samsung phones should be the company's most highly tested set of devices to date. The software should have fewer bugs and be optimized for battery life. Hardware will also have been battle tested for all types of environments.

Samsung processes get a boost. Samsung has taken 120 days to review every aspect of its process from product design through the supply chain. It’s likely that the inspections revealed areas of improvement across every aspect of Samsung’s smartphone business. The external reviews will only make the company’s processes better.

Industry safety is improved. If not addressed, these issues would’ve arisen in another smartphone or IoT manufacturer’s product. The focus on testing and battery safety will make the smartphone industry safer overall.

Battery makers margins get thinner. The pressure was already on battery manufacturers to deliver thinner products at faster rates. With the latest set of safety checkpoints, battery companies will need to perform deeper inspections, in the same amount of time, for the same revenue.

Samsung products timetables get pushed out. The timeframe for introducing new products will be pushed out as the company changes its internal layout to accommodate changes in battery placement. Given it has taken a 120-day testing window, it’s likely that device roadmaps will be pushed out at least 6 months. The upside, Samsung’s 7 Edge product appears to be holding its own in the market.

Samsung isn't the first company to have a major consumer recall, nor will it be the last. It’s how a company handles a product recall that determines its future success or failure. While it’s been a difficult time for Samsung, the company took ownership of the issues, acted quickly and worked diligently to fix its problems. With its new and improved quality assurance processes and design prowess, Samsung should make a strong comeback as the world awaits the arrival of the Galaxy Note 8.


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