Just two days before Samsung’s launch of the Galaxy S8 on Wednesday, the company announced it will consider using some recalled Galaxy Note7 smartphones for re-sale as refurbished or as rental phones.
One analyst bashed the plan as “disastrous,” while another said Samsung is performing a “balancing act” following the Note7 fallout when some units overheated and caught fire.
Samsung also said in a statement on Monday that it could detach salvageable components from the Note7s for reuse. It may also extract metals like copper, gold, silver and nickel from the devices using environmentally friendly methods.
Some Note7s overheated and caught fire last year, leading to a global recall of more than 4 million devices at a cost of $6 billion to the company. The company came under fire at Mobile World Congress in Barcelona in February from Greenpeace over how Samsung planned to for recycle or dispose of the Note7s.
On Tuesday, Gartner analyst Werner Goertz called Samsung’s refurbishing idea “disastrous,” since air travel restrictions on carrying Note7s onboard still apply. “Why subject the already tarnished Samsung brand with more exposure to Note7?” he asked.
Goertz noted that the mechanical enclosure that failed to accommodate the swelling of the malfunctioning Note7 batteries apparently still remains the same. “What prevents further damage?” in Samsung’s refurbishment announcement, he asked.
On the other hand, Goertz called Samsung’s plan to recycle components a good idea, provided the parts can be harvested economically.
Several analysts and industry insiders said it is unlikely that Samsung that would find a market for refurbished Note7s in the U.S. or Western Europe, but could do so in India, Asia Pacific or Latin America, depending on the price.
“We believe Samsung has addressed any risk of these devices ever catching fire,” said Craig Reigelhaupt, direct of product marketing for Tangoe, a consultancy and expense software provider to IT shops.
He acknowledged that businesses in North America and Western Europe might be reluctant to buy refurbished Note7s and will wait for the imminent launch of the Galaxy S8. Still, he said only a “handful” of battery fires were reported that tarnished the Note7’s image.
Samsung hasn’t definitively stated whether it would sell any of the refurbished devices in the U.S., but said it would provide refurbished Note7s in some markets depending on consultations with regulators and wireless carriers. The company has already instituted an eight-point safety check for testing its batteries since the Note7 fiasco and has appointed a team of academic experts to research future battery technologies.
Jack Gold, an analyst at J.Gold Associates, said Samsung faces a “balancing act” with how to deal with the millions of recalled Note7s. On the one hand are environmental groups urging safe disposal and recycling; on the other are lawyers in the U.S. willing to file personal injury lawsuits on behalf of clients harmed by faulty products.
“Samsung is doing a good job of … component recycling in many markets where the devices were banned, but also addressing the fact that there are many parts of the world where reconditioned phones are a part of the landscape,” Gold said. “In some parts of the world, refurbished and used phones are a huge part of the marketplace.”
“Samsung probably couldn’t retrieve all of the Note7’s anyway,” Gold said. Samsung has said more than 96% of all the Note7 devices have been returned.
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