Why 90% of customers still want their Note7

Digital stylus, large display, strong Samsung brand all cited as reasons customers are replacing their Note7 devices post-recall

Samsung Galaxy Note7
Credit: Samsung

Samsung reported that 90% of Note7 owners in the U.S. have opted to receive a new Galaxy Note7 as part of the ongoing recall for a potential fire hazard related to batteries in the original phones.

Skeptics said that 90% replacement number seems high, considering the original phones could overheat and catch fire.

But apparently many customers want the Note7's digital S Pen stylus to touch and write on its 5.7-in. high-resolution display, among other high-end features, badly enough to continue use it -- at least when it is safe, as Samsung has asserted the new units will be.

Still, what happened to the age-old adage of "once burned, twice shy?" Why are these Note7 customers so faithful? And what has happened to the other 10%?

"The 90% number just doesn't seem right, but it could be," said Jeff Kagan, an independent analyst who was highly critical of Samsung when the battery problems were first reported. "Samsung has a strong brand, but even the very strongest brand can be broken."

The facts: As of Thursday night, Samsung reported around half of all recalled Note7 phones sold in the U.S. had been exchanged through the recall. The replacements became widely available on Wednesday and, since that time, some 90% of older Note7 owners opted for a new Note7, a Samsung spokesperson said via email.

Samsung didn't provide the exact number of new Note7s swapped out, although it could be in the range of 450,000 devices. That number is based on the official recall of a million Note7s by the U.S. Consumer Product Safety Commission on Sept. 15.

Still, Samsung had said on Tuesday that 500,000 Note7 replacement devices had been shipped to U.S. retailers and carriers for exchanges starting on Wednesday. It seems unlikely that all 500,000 -- or even 450,000 -- Note7s would have been exchanged only a day later, by Thursday, at thousands of retail outlets, so the number of new Note7s handed out could be substantially less than 450,000.

That's possibly because not all 1 million that the CPSC said were recalled needed to be replaced. On the other hand, 130,000 Note7s had already been exchanged in the U.S. by Sept. 16, Samsung said four days later, which indicates there really might be 450,000 people on U.S. streets carrying a new Note7 that Samsung has deemed safe.

Some analysts said it is entirely possible that 90% of Note7 customers would opt to get a new Note7, partly because relatively few people were affected by Note7s that overheated or caught fire when compared to the total numbers sold. In the U.S., the CPSC said that it received 92 reports in the U.S. of batteries overheating, including 26 reports of burns and 55 reports of property damage, including fires in cars and a garage.

In other words, many users simply just hadn't been directly affected by the fire hazard in the first place, at least enough to damage their image of the advantages of using a Note7.

The 90% who have exchanged is "not a surprise," said Jack Gold, an analyst at J. Gold Associates. "What I wonder about is not the 90% replaced, but what happened to the other 10%? Are they ignoring the recall? Are they mad at Samsung and just not willing to give them a chance to make things right and have already gone to another device?"

Gold theorized that the 90% replacement number would be lower if the functionality of the Note7 itself was defective instead of just the battery -- in other words, if it crashed all the time, lost data or wouldn't load apps. "Yes, the battery being defective could be dangerous, but overall I think most customers liked the form factor and functionality of the device and see the defective battery as a peripheral issue not directly associated with the functioning of the device," Gold said.

"We are pretty accustomed to having to replace batteries in all manner of devices and things we buy," Gold added. "I think that mindset is in play here. The device works fine once the battery is replaced and psychologically that's fine with us."

In addition to an exchange for a new Note7, Samsung had all along said customers could get a Galaxy S7 or Galaxy S7 Edge as a replacement. The CPSC also said customers could demand a full refund. Customers who exchanged the Note7 were eligible for a $25 credit as well, according to the Samsung recall website.

Patrick Moorhead, an analyst at Moor Insights & Strategy, said the 90% replacement number is because the "Note7 is a great phone and Samsung has a very good brand." In addition to the S Pen with off-screen note-taking ability and its Super AMOLED display, he mentioned Note7's mobile wallet capability, water resistance, ultra power savings mode and more.

"Consider also that consumers always had the option to buy an iPhone and these consumers opted not to," he concluded.

Kevin Burden, an analyst at 451 Research, said the Note7 is somewhat unique, driving users to want to keep it. "Those who buy Galaxy Note devices do so for its larger screen and S Pen," he said. "Those opting to have their old Note replaced with a new one do so because they would need to compromise on those two selling points with almost any other device they would choose."

Since the fire hazard was traced to the battery, Burden said it was a "straightforward fix for Samsung that shouldn’t force users to compromise on the reasons they purchased the Note7 in the first place."

Survey data gathered by 451 Research has also shown that users are not losing their confidence in Samsung because of the recall.

Jack Narcotta, an analyst at Technology Business Research, said the high percentage of users wanting a replacement unit could be for a simple reason: Users bought the original Note7s just over a month ago and want a full return on their investment.

"The situation would be very different if the Note7 recall occurred 10 to 12 months after its release," Narcotta surmised. "You’d likely see a much lower percentage of customers willing to return to the same product."

This story, "Why 90% of customers still want their Note7" was originally published by Computerworld.

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