Exploding Phones!
-Jake Mistele
Imagine going to bed one night and setting your phone down on your dresser and waking up to smell of smoke and image of your room on fire. Or imagine receive burns from your phone in your pocket. Or just setting your phone down, leaving and then coming back to a small fire. In a highly competitive Monopolistic Competition market Samsung could have really hurt themselves and Apple could be receiving customers. Consumers all around the world are experiencing their Samsung Galaxy Note 7’s starting on fire. Because of these incidents Samsung had to recall 2.5 million phones. Now of course recalling that many phone will cost quite a bit of money, but what Samsung is really concerned with is the demand for their product.
If you were to look at a demand curve of the phone after this incident you would notice a hard shift to left signaling a decrease in demand. Demand determinants such as consumer expectations and substitutes cause this shift because why buy a phone if you know it will start on fire and why buy a phone that will start on fire when you could buy an Iphone that won't? These are the questions that consumers will now ask themselves when they are going to buy phones in the future. And these are the opportunity costs decisions consumers will have to make. 
After the recall each customer was given a new phone, however even after the recall consumers again are reporting problems of overheating and one customer's phone set fire again. The problem is getting so severe that some airlines won't let customers fly on their planes with the Samsung Galaxy Note 7 creating a negative externality. Samsung is on the brink of losing lots of their customer base and demand. Samsung is finding themselves in a similar situation as Chipotle was with their multiple scares of E.coli. Because of the decreased demand and high supply the law of supply comes into to play and Samsung will most likely offer less of the phone due to the small price. When Chipotle hit rock bottom they had to increase demand again in their product somehow therefore they offered free food and publicized the new safety features put into their food. Even though it could be costly in the short term Samsung could offer huge discounts in phone prices because the law of demand states when the price is lower consumers buy more. Samsung should also take Chipotle approach and really prove to the public the measures they now take to make sure something like this doesn’t happen again.
In conclusion Samsung in the short term will suffer economically but at the long term they want to continue to grow. Samsung needs to do something to get rid of the expectations that their phones exploded and start on fire. They also need to prove to the consumers again why you should buy their phone over Apple’s, other you will not see Samsung as a company in the future.
Works Cited
Martonik, Andrew. "Samsung Galaxy Note 7 Fires, Recall and Cancellation: Everything You Need to Know." Android Central. N.p., 13 Oct. 2016. Web. <http://www.androidcentral.com/samsung-galaxy-note-7>.
This is having a huge impact on the media world. People are actually scared of Samsung products as other goods have been doing the same. This incident is capable of ruining their business however I think they will recover pretty well in time. They may not get back to where they were before this for a few years though. I don't think the problem is over yet and there is a lot of work to be done on their end to compete with apple products.
ReplyDeleteKnowing that Samsung phones are exploding in people’s hands, in their pocket and on their dressers is a very scary situation. I especially don’t blame airlines for taking people’s Samsung phones because I would not want to be on an airplane in midair when someone’s phone explodes. But not only is the demand of these phones lower, but if this continues and Samsung doesn’t become a company anymore, think of how many people are going to lose their jobs. The unemployment rate is already at 4.9% as of a couple of days ago. If Samsung goes out of business because they can’t fix this problem, then we could be talking about 275,000 people losing their jobs, according to Brad Reed on BGR, and possibly even more. On the other side of the spectrum, if Samsung can’t fix this problem or they go out of business, think of how much profit and workers Apple will gain! One could then think that Apple won the race in the phone business. All in all, if Samsung can’t fix this “exploding phone” problem, then they could be looking at losing over 275,000 workers and Apple gaining a lot of profit and potentially workers.
ReplyDeletehttp://bgr.com/2014/09/26/how-many-people-work-for-samsung/
This has only temporarily affected Samsung. While this issue is a huge safety hazard, in the next yaer people are going to probably forget about because Samsung will already have a new phone that' "better then ever". So while the the income of Samsung may not be huge right now; they will recover to their former glory.
ReplyDeleteAlthough Samsung plans on their company continuing to grow (once they get past this "little" incident) I do not personally believe this to be very possible. Because of the fact that this is a very intense safety hazard I do not see people ever favoring this company's products over others ever again. It would be one thing if Samsung was selling phones that have a major bug- causing them to be slow or just not work properly, but it's another thing to be handing out a product that people have on them at all times that may or may not catch fire in your pocket.
ReplyDeleteNot only does this issue affect Samsung, but it could interfere with other companies profits too. For example, if a phone were to explode on an airline and cause a big accident, that airline would be held responsible regardless of what started the fire. Not only would they have to replace the damage caused by the fire, but it would also turn potential customers away from that airline and towards one that has taken better safety measures. Airlines that have better safety measures would avoid the cost of an accident, but still have to pay to put the safety measures in place. So far, this has affected a lot more than just Samsung. If I worked for an airline that was affected by this incident, I would not buy any of their products. This will make it harder for Samsung to regain their integrity as a brand.
ReplyDeleteThe new Samsung 7 might have the demand be very low because of the phones catching on fire. However getting their demand backup will be tricky not matter what even if a newer phone comes out people will still be scared that it might catch on fire. So Samsung and any company that allows cell phones to be used are in trouble because if the phone starts the fire then the company will have to pay for the damages then. Also Samsung might even go out of business because of this so Samsung must think of something new and fast.
ReplyDeleteI agree with you, why buy a Samsung 7 when you could get an iPhone, a phone that won't start on fire. It's dangerous to have one, because you really don't know when it could explode, and it could affect the people around you and cause commotion if something were to happen. Though, as Samsung has gotten popular, I feel the company has lacked its popularity due to the incident. With that, more people have been turning to iPhones and if the Samsung company wants to get somewhere, they better step up their level because apple is a great product.
ReplyDeleteSamsung has created a huge problem for themselves and their consumers. While competing directly against Apple, they were already losing out in facets of technology. Now, with this scare of burning phones, consumers really aren’t interested in their products. Until Samsung can improve their cellular devices, tech department, and happiness in consumers, they will continue to have a problem. While Samsung isn’t completely done for, they have a lot of work to do in the future. However, if this problem doesn’t get fixed soon, Samsung might not be in business for too much longer.
ReplyDeleteAs new electronics come out, we all seem to be the first to pick on their problems, and rightfully so, especially when the problems are as dangerous as this. There always seems to be an issue with the item that is supposed to be the next best thing. As more technology is created, the more problems we seem to have, and the more brands are criticized for their mistakes. If people know that products are faulty when they first come out, it would make sense, at least in my mind, to refrain from purchasing these “better” goods until they are void of all possible problems. Overall, companies should try to work towards making fewer goods with less problems than developing goods at a rate that is too high for successful function.
ReplyDeleteRegardless of customer switching from android to Iphones there were lot of devastating problems that went with the explosion of the Samsung Galaxy Note 7. For example I heard that because of the explosion, a six-year-old boy being burned; a house burning down; and a car catching fire — all blamed on Samsung's new phone. The Samsung is also banned in certain places like college campuses and also in an airplane. This will affect the Samsung company a lot and customers might start to hesitate to buy any product from this company but this might just be a shot term incident. People will eventually get over it and start buying new models from Samsung. I don't think that the demand for IOS increase because of the price range.
ReplyDeleteI was most interested in the exploding phones article. I would suspect that not only would the demand curve for this particular Samsung phone would decrease, but the consumption of products this brand as a whole. While phones lighting on fire seems a rather absurd problem, we see that some planes have even begun to ban flying with this type of phone, which will surely decrease sales and revenue of Samsung. I agree with the blogger that Samsung certainly has the difficult job ahead of them of reproving credibility and winning back customers’ trust and loyalty. The Chipotle parallel was an interesting connection and the commentary was well -written and enjoyable to read. Thank you !
ReplyDeleteSamsung has a bigger problem on their hands than just a burning phone. They are losing profit, customers, as well as their brand reputation. With Apple, their top competitor, releasing the Iphone 7, consumers may find this to be the perfect time for a trade-off, since a new phone is better than a burning phone. This is a problem that Samsung can recover from, however many adjustments will need to made to ensure the product is safe, trustworthy, and satisfies the remaining Samsung users. This recovery may take some time and effort from different tech departments but if the problem is addressed, this is not the end of the Samsung.
ReplyDeleteWith the release of the Samsung Note 7, other phones have been given an opportunity to steal there customers. However in the long term, Samsung will not lose to much profit, the addition of new cell phone providers will make competition more intense. This is already seen from Motorola releasing there new "Moto Mods" for there phones. All in all, Samsung should cuts there losses and just not produce or sell these phones and focus on the future to make sure this doesn't happen again.
ReplyDeleteNot only do I believe that the quality of the Samsung phone is worse than that of the Apple, but this problem with the exploding phones is absolutely destroying Samsung. When I first saw this exploding phone story, I was shocked. How could a company release a phone into the market that would explode, and in turn, "explode" their company. Ha, ha, get it? But with this exploding phone case, Samsung's already plummeting sales are heading towards the ground floor a little faster.
ReplyDeleteI agree that Samsung made a huge mistake that will cost them both money and customers in the short term, however I am not so sure that everything will turn out okay in the long run. After the first fire accidents happened samsung should have done everything they could to prevent a fire from ever happening again. However, since they let it happen again, after they promised they wouldn’t, customers will have a harder time believing them when they say they have new safety features to prevent fires. Also, after the first fires happened, I am sure many samsung users who deciding between apple and samsung would have switched to apple. Once you have all of your info and other things on an apple device it is very hard to switch back to samsung, which means that most of the customers lost during that time period are likely lost forever. Samsung should try to advertise new safety features to get more customers on board, however I am not so sure that it is going to work the way it worked for chipotle.
ReplyDeleteSeeing as the demand for Samsung phones is already below that of iPhones, this whole exploding phone incident has really hurt them. Lots of negative economics factors are impacting Samsung's market right now and you pointed this out with excellent use of economic terms such as negative externalities and explanation of demand determinants? Why would people even trust a phone company if they exploded, caused damage to property and themselves, and cant even be allowed on airlines? To add to that, Samsung phones that dont explode also are less superior to iPhone's through what history as shown. This can be seen in the slow running software, more complicated features and app store, and constant threats of viruses. I actually used to have a Galaxy S2 that simply stopped working because the phones software was corrupted, and it was not my doing either. Never dropped, never downloaded corrupt programs, it just stopped working like that in one day. This has never happened to me with an iPhone which is why Samsung is really in a deep economic hole here. They will need some kind of miracle to recover now because the demand for their phones and their reputation has severely dropped. Is the marginal cost even worth the marginal benefit of trying to fix this problem, or should Samsung just give up?
ReplyDeleteSeeing as the demand for Samsung phones is already below that of iPhones, this whole exploding phone incident has really hurt them. Lots of negative economics factors are impacting Samsung's market right now and you pointed this out with excellent use of economic terms such as negative externalities and explanation of demand determinants? Why would people even trust a phone company if they exploded, caused damage to property and themselves, and cant even be allowed on airlines? To add to that, Samsung phones that dont explode also are less superior to iPhone's through what history as shown. This can be seen in the slow running software, more complicated features and app store, and constant threats of viruses. I actually used to have a Galaxy S2 that simply stopped working because the phones software was corrupted, and it was not my doing either. Never dropped, never downloaded corrupt programs, it just stopped working like that in one day. This has never happened to me with an iPhone which is why Samsung is really in a deep economic hole here. They will need some kind of miracle to recover now because the demand for their phones and their reputation has severely dropped. Is the marginal cost even worth the marginal benefit of trying to fix this problem, or should Samsung just give up?
ReplyDeleteI thought this was a great topic of choice and was written really well from the economic standpoint. From an IPhone user this doesn’t really effect me at all, but I know a lot of people that it potentially could. This is huge and has impacted millions all over. I think it is crazy that if you have this phone and it’s working just fine, airplane companies won’t let you board with it. That proves that this problem can actually have an economic effect on other companies like these airlines with not letting people fly with the phone. Another company it could effect is Otterbox because they have to stop making cases for that size as well as all the ones that they have already produced and sent out, won’t be sold and is a loss of money. Overall I really liked the topic and thought the use of vocab flowed throughout the whole piece very nicely.
ReplyDeleteAs I have a Samsung Note 7, I know the problems that this phone causes. Getting on planes is a struggle in and of itself, I have to remove the battery from my phone (even after receiving a new one) and buy a new battery wherever I am going. This has caused me to order a iPhone 7 Plus, and has switched me over to being a consumer of Apple products, including the rest of my family who used to own Samsung products and no longer will purchase them. I think this is causing Samsung's already decreasing sales to plummet even further, and has discouraged people away from buying their products.
ReplyDeletePersonally, I used to have a soft spot for Samsung phones over iPhones. I though that they were more durable and efficient. However, the multiple accounts of the exploding phones is too big of an issue to overlook. Not only is it a hazard to the customers, it will ruin their reputation as a whole. Their company will crash, loose all possible buyers that will switch over to Apple, and quite possibly (though perhaps drastic) go out of business if the matter is not soon resolved.
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ReplyDeleteSamsung is overall a very well respected company, as they produce TV’s, appliances, and high quality cell phones. It helps immensely that they don’t exclusively produce phones, like Chipotle only producing food. As such I don’t think that their business is going to go down dramatically, however, the overall negative publicity will be undeniably detrimental to their place in the phone industry. While their normal galaxy phones sell well, the other option - the note - will indubitably bring the normal galaxy sales down. It’s going to be a long path back for the note and even perhaps the normal galaxy. As iphone sales and company loyalty spike, the path back is going to be extremely difficult. There are no game breakers, no massive problems with the reliable and simple iphones
ReplyDeleteSamsung has suffered a huge decrease in sales because of the phones starting on fire and this definitely doesn’t help the competition against Apple. Apple on the other hand is probably experiencing an increase of sales because Samsung users may have lost trust in their products because two phone models have started on fire. I do agree with the post though that Samsung will make a comeback in a long run because they will prove to their customers that they have learned from the problem and it will not happen again.
ReplyDeleteIn the race to have the best and most exciting new technology, Samsung has let major defects in product testing and safety occur. In order to repair their consumer base, they must take time to rebrand themselves as a tech company that truly does care about consumer safety and product quality. While this continued debacle has seriously lowered demand for Samsung products, it is a very different story for competitor Apple. While some consumers have ranged from disappointing to outraged at the Apple iPhone 7's lack of headphone jack and certain phone colors prone to scratching, Apple can at least assure their customers that their product is safe. While this does not alleviate their problems entirely, it does rebuild their customer confidence and help them retain a strong consumer base. Overall, problems in the smartphone industry could lead to an overall trend of consumers deciding to wait longer before buying new phones or waiting to upgrade until the now seemingly inevitable problems with each new model are solved, leading to a slight decrease in industry demand.
ReplyDeleteI was unaware of this problem with Samsung phones until now. This problem could potentially be disastrous for Samsung especially around the holiday's. Black Friday will also be a factor that could negatively affect Samsung. Usually people would wait in long lines waiting for the new phone or tablet at a lower price. However, because of this new found problem with Samsung phones it could cause a huge decrease in sales during Black Friday.
ReplyDeleteThe fact that phones are exploding is a terrifying thing to think about and I know that if something like this happened to my phone, I definitely would not be buying the same type of phone again and I am sure many people would feel the same. Automatically giving customers a new phone after the recall was a good idea, however, I feel like they should have given them a substitute rather than giving them the same type of phone that could just end up exploding again. If this problem does not get fixed soon, then demand for the galaxy note 7 is going to decrease drastically, causing many problems for the company.
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