Tuesday's decision to abandon the Galaxy Note7 phone will cost Samsung billions.
(CCM) — Samsung's decision to ditch its flagship Galaxy Note7 phone two months after it was released will cost the company billions of dollars, making it one of the costliest product safety failures in history, according to a Reuters report. The company announced that it would be temporarily suspending sales of the phone on Monday — although a spokeswoman still insisted that they were safe — before finally throwing in the towel and abandoning production yesterday. All owners of Galaxy Note7s are expected to be offered a refund or an exchange for a different Samsung phone. Samsung shares have plummeted 10% this week as both consumers' and investors' faith in South Korea's largest company has been shaken.
The Note7 fiasco offers other phone manufacturers an opportunity to sell their products to former Samsung customers, but most have chosen not to launch new large screen phones recently to avoid going head to head with the Note7 and Apple's iPhone 7. Apple is expected to increase production of its large screen iPhone 7 Plus significantly, but Google's Pixel smartphone and LG's V20 smartphone — two large screen devices that are due to launch soon — both have relatively small planned production volumes that may be difficult to increase quickly to capitalize on Samsung's misfortunes.
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