New in­ci­dents defy Sam­sung’s ef­forts to end smart­phone woes

Daily Local News (West Chester, PA) - - BUSINESS - By Bran­don Bai­ley AP Tech­nol­ogy Writer

SAN FRAN­CISCO >> Sam­sung Elec­tron­ics seemed to have its smart­phone trou­bles un­der con­trol — un­til au­thor­i­ties had to evac­u­ate a South­west Air­lines flight in Ken­tucky last week for an in­ci­dent that in­volved a re­place­ment phone.

The rea­son: Au­thor­i­ties said a Sam­sung smart­phone started smok­ing and mak­ing “pop­ping” noises, just mo­ments af­ter its owner had boarded the plane and turned off the de­vice.

Air­line pas­sen­ger Brian Green, 43, says the de­vice was a Galaxy Note 7 that he had picked up from an au­tho­rized AT&T re­tailer on Sept. 21, as a re­place­ment for another Note 7 phone that he re­turned when Sam­sung an­nounced a global re­call a week ear­lier. The re­call came af­ter a se­ries of in­ci­dents last month in which Note 7 bat­ter­ies over­heated or caught fire. But Sam­sung had promised con­sumers that the re­place­ment mod­els were safe.

Now the South Korean tech gi­ant is fac­ing more scru­tiny, af­ter ear­lier crit­i­cism for be­ing slow to re­act and send­ing con­fus­ing sig­nals in the first days of the re­call.

“They’re in a re­ally tricky spot,” said Ben Ba­jarin, a tech in­dus­try an­a­lyst with the Cre­ative Strate­gies re­search firm. “There’s such a stigma around this de­vice now, that it’s hard to see how sales can do well go­ing for­ward.”

Con­sider Green’s re­ac­tion: “I re­ally liked the de­vice. It had a lot of nice fea­tures,” he told The As­so­ci­ated Press in an in­ter­view Fri­day. But af­ter the in­ci­dent on the plane, he bought a new iPhone 7 from Ap­ple, rather than take his chances with yet another Sam­sung Note. “At this point, I don’t want to mess with it any­more.”

Au­thor­i­ties haven’t con­firmed what model of Sam­sung phone was in­volved in last week’s in­ci­dent. A spokes­woman for the Con­sumer Product Safety Com­mis­sion said Fri­day that her agency is still in­ves­ti­gat­ing and had no fur­ther in­for­ma­tion.

On Satur­day, Michael Kler­ing, a Ken­tucky res­i­dent, said his Note 7 phone also caught fire even though its bat­tery had been re­placed. Kler­ing wrote on Face­book that he and his wife woke up be­cause their bed­room was fill­ing with smoke, and they feared that their chil­dren were in dan­ger.

“The phone did not seem to ac­tu­ally pro­duce a lot of flame but was hot enough to melt the case it was in and burn my

night­stand,” he said. “It also cre­ated enough smoke to fill my room.”

Kler­ing wrote that he and his wife now have bron­chi­tis and are be­ing treated.

He said he went to a lab­o­ra­tory with Sam­sung em­ploy­ees where the phone was ex­am­ined. But he said he doesn’t feel the com­pany is tak­ing the sit­u­a­tion se­ri­ously enough and won­dered whether it plans to act on his re­port.

Com­mis­sion of­fi­cials and Sam­sung an­nounced a for­mal re­call on Sept. 15 af­ter au­thor­i­ties said they re­ceived 92 re­ports of Note 7 bat­ter­ies over­heat­ing in the U.S., in­clud­ing 26 re­ports of burns and 55 cases of prop­erty dam­age. Au­thor­i­ties urged con­sumers to turn off the phones and re­turn them for a full re­fund or re­place­ment. Sam­sung said re­place­ment mod­els that were free of de­fects be­came avail­able in this coun­try on Sept. 21.

Af­ter the South­west Air­lines in­ci­dent, rep­re­sen­ta­tives of the four lead­ing U.S. wire­less car­ri­ers said Fri­day that cus­tomers who had al­ready re­ceived re­place­ment Note 7 phones could re­turn those new de­vices if they have con­cerns.

Re­fer­ring to the safety com­mis­sion’s in­ves­ti­ga­tion, Sprint said in a state­ment, “At this time, CPSC has not specif­i­cally said if cus­tomers should or should not use the re­place­ment model. If a Sprint cus­tomer with a re­place­ment Note 7 has any con­cerns re­gard­ing their de­vice, we will ex­change it for any other de­vice at any Sprint re­tail store dur­ing the in­ves­ti­ga­tion win­dow.”

The Galaxy Note 7, which sells for $850 to $890, com­petes in the high-end smart­phone mar­ket with Ap­ple, which re­cently re­leased a new iPhone 7, and other pre­mium brands such as Google’s new Pixel phones.

Sam­sung says it has re­called about 2.5 mil­lion Note 7 de­vices around the world since prob­lems emerged last month. An­a­lysts es­ti­mated the re­call would cost the South Korean tech gi­ant as much as $1.8 bil­lion.

Still, the com­pany said Fri­day that its third-quar­ter profit still rose 6 per­cent, to about $7 bil­lion, on to­tal sales of $43.9 bil­lion — thanks to in­come from Sam­sung’s other prod­ucts, which in­clude ad­vanced com­puter chips and high-end smart­phone dis­plays.

The Note 7 isn’t Sam­sung’s big­gest seller. The com­pany sold 76 mil­lion smart­phones in the se­cond quar­ter of 2016, most of them lower-priced mod­els. Among higher-priced mod­els, Ba­jarin es­ti­mated Sam­sung sold well over 10 mil­lion Galaxy S7 phones, or four times as many as the Note 7, which has a dig­i­tal sty­lus and other dis­tinc­tive fea­tures.

But Ba­jarin said he’s heard some in­de­pen­dent man­u­fac­tur­ers may cut pro­duc­tion of cases and ac­ces­sories for the Note 7, in light of slip­ping sales. He also sug­gested some wire­less car­ri­ers may be hes­i­tant to pro­mote the Note 7 heav­ily in their re­tail stores.

“If your ag­gres­sive sales pitch causes a con­sumer to suf­fer prop­erty dam­age, you’ve just dam­aged your re­la­tion­ship with this cus­tomer,” he said.

Sam­sung has shown no signs of back­ing away from its product, or halt­ing pro­duc­tion, Ba­jarin

noted. But if more trou­bling in­ci­dents arise, he said the com­pany might have to re­con­sider.

As for Green, the Indiana busi­ness­man told The As­so­ci­ated Press that he had checked to make sure the phone he got on Sept. 21 had the pack­ag­ing marks and a green bat­tery in­di­ca­tor that Sam­sung said would show it wasn’t sub­ject to the re­call.

“I don’t know what else you’re sup­posed to do,” he said.

A photo of the phone’s pack­ag­ing, which Green pro­vided to The As­so­ci­ated Press, shows a black square on the la­bel, which Sam­sung has said would in­di­cate a non-de­fec­tive phone. The la­bel also has an iden­ti­fy­ing num­ber that, when typed into Sam­sung’s re­call web­site, re­turns a mes­sage that says, “Great News! Your de­vice is NOT in the list of af­fected de­vices.”

Green said he had no prob­lems with the re­place­ment un­til Oct. 5, when the smoke caused him to pull the de­vice from the front pocket of his jeans. Af­ter au­thor­i­ties or­dered ev­ery­one off the plane, Green said he later saw singe marks on his jeans. An air­line rep­re­sen­ta­tive said the phone scorched the car­pet where Green left the de­vice on the air­plane floor.

Af­ter speak­ing with au­thor­i­ties by phone last week, Green said he had an ap­point­ment to meet with them Mon­day. In a state­ment last week, Sam­sung said there was “no ev­i­dence that this in­ci­dent is re­lated to the new Note7.” Sam­sung and AT&T rep­re­sen­ta­tives didn’t re­spond Fri­day to a re­porter’s ques­tions about how a de­fec­tive phone might have been pro­vided as a re­place­ment af­ter the re­call.

THE AS­SO­CI­ATED PRESS

A vis­i­tor looks at the smart­phone cases of Sam­sung Elec­tron­ics’s Galaxy Note 7 at a shop in Seoul, South Korea.

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