Samsung’s lack of due diligence before launching the Galaxy Note 7 is costing the company dear. Having pulled the plug on its flagship phablet earlier this week, the company is rumored to be even considering killing off the Note brand itself, which, if it does materialize, would be an extraordinary step considering how popular the Note line has been around the world. Whatever Samsung decides to do in the end, the company is expected to take a massive hit financially because of the controversy. Some estimates have indicated that the company may lose as much as $17 billion because of the Galaxy Note 7 fallout, but even more worryingly, many market analysts and industry watchers are also expressing concerns that the damage is unlikely to be restricted only to the short term.
By some estimates, as much as 15% of South Korea’s GDP is directly or indirectly dependent on the behemoth conglomerate. Samsung Electronics accounts for a large chunk of the company’s revenues, and smartphones have been the single most lucrative growth engine for Samsung Electronics during this decade, with appliance and household electronics sales slowing down significantly in recent times. That being the case, the predicament Samsung finds itself in following the Galaxy Note 7 fiasco is precarious, to say the least. With the company’s overall brand value expected to be adversely affected by the recent events, those in charge of keeping the South Korean economy going in the right direction are now worried about how much the crisis at Samsung will affect the country’s broader economy, going forward.
According to reports coming out of South Korea, the Bank of Korea Governor, Mr. Lee Ju-yeol, recently warned that the Galaxy Note 7 cancellation could affect the country’s economy adversely. While Mr. Lee is not yet talking numbers, many economists and financial institutions in the country have also reiterated that South Korean exports may be adversely affected because of the fallout from the Galaxy Note 7 saga. Samsung lost a whopping $20 billion from its market cap within just one trading session earlier this week, after announcing that it is discontinuing its premium phablet for good because of public safety concerns. With the South Korean economy already trying to recover from the recent strike by the country’s automobile workers and the ongoing corporate restructuring of the country’s ailing shipbuilders, the Samsung crisis could not possibly have come at a worse time for the country’s 50 million citizens.