Samsung's Battery Crisis Began With Rumors of a 'Dull' iPhone

Samsung pushed suppliers to meet tighter deadlines for an earlier launch of the ill-fated Galaxy Note 7 after hearing that the iPhone 7 would have no major design changes, according to a new report published today.

The Bloomberg report cites multiple sources indicating that executives at Samsung saw rumors of Apple's apparent lack of innovation this year as an opportunity, and quickly approved a slew of new features for the Note 7 after getting hold of an early version of the device.

According to one person familiar with the matter, the select group of top managers "gushed over the upgrades and praised each other's work", and approved a launch date 10 days earlier than last year. Samsung's unveiling was August 3 this year, compared with August 13 in 2015.

As the launch date approached, employees at Samsung and suppliers stretched their work hours and made do with less sleep. Though it’s not unusual to have a scramble, suppliers were under more pressure than usual this time around and were pushed harder than by other customers, according to a person with direct knowledge of the matter. One supplier said it was particularly challenging to work with Samsung employees this time, as they repeatedly changed their minds about specs and work flow. Some Samsung workers began sleeping in the office to avoid time lost in commuting, the supplier said. Samsung declined to comment on whether deadlines were moved, reiterating that products are only introduced after proper testing.

When the phones got into customers' hands, reports of exploding handsets began. According to Bloomberg, executives at Samsung headquarters were in shock. Internally, there was a debate over whether to do a full-blown recall or to take less dramatic steps, like a battery replacement program. In the end, Samsung mobile chief decided on a full recall.

Samsung has drawn criticism for the steps it took next. Apparently driven by good intentions, the company announced the recall plans publicly before working out how millions of consumers in 10 countries would actually get replacements.

Then it sent mixed signals about what customers should do. First, Samsung told people to shut off their phones and stop using them. A few days later, it offered a software patch to prevent batteries from overheating, signaling consumers could keep using the phones.

But Samsung moved so fast it got ahead of regulators who help organize such programs. In the U.S. for example, companies are supposed to notify the Consumer Product Safety Commission within 24 hours of uncovering problems. Instead, Samsung went public on its own and consumers didn't have clear guidance on how to exchange their phones.

Asked to confirm that launch deadlines for the Note 7 were shifted, Samsung told Bloomberg that release dates are determined by "the proper completion of the development process and the readiness of the product for the market."

Meanwhile sales of Apple's iPhone 7 appear to have exceeded analysts' expectations, particularly demand for the larger 7 Plus, which was all but sold out across the globe on launch day. The company's choice of black handset color options has also piqued interest among consumers, despite concerns about the lack of a headphone jack on the new devices.

You can read more of the Bloomberg story here.