Samsung’s critics: recalling the future

Three dozen melted-down batteries among 2.5m new mobile phones is no reason to slow down innovation

Are you disdainful of innovations you believe to be risky? Are you also suspicious of big corporations, especially if they’re making money in IT, or from Asia? Then slag off the ‘exploding’ Galaxy Note 7, made in the Republic of Korea by Samsung.

You will be in good company. From America’s Daily Beast to the New Indian Express, commentators repeated the phrase ‘spate of explosions’. In fact, this famous spate amounted to just 35 red-hot or fiery phones among an initial, soon-to-be recalled batch of 2.5 million – an incidence of danger that, while regrettable, is still vanishingly small. But that was hardly mentioned. When a handful of replacement models in America also became red-hot pokers, media pundits couldn’t contain themselves. All rubbed their hands when Samsung called a blanket halt to sales; all insisted on headlines when the company permanently closed down the manufacture of Note 7. Anxious to encourage anxiety among Britain’s very few early buyers of the 7, the therapeutically minded BBC asked: ‘Do you own or have you pre-ordered a Galaxy Note 7? Are you worried about it? Let us know about your experiences. Email haveyoursay@bbc.co.uk with your stories’. Meanwhile a BBC newscaster contemptuously suggested that Samsung had ‘gone up in smoke’.

A debacle, not a disaster

It’s all alarmist hooey. Any innovation is typically accompanied by teething problems. In the case of Samsung, no user of its 7 was killed, even if, across the planet, one or two people ended up in hospital. But Samsung’s critics would rather throw mud at risk-taking  and experiment than ask deeper questions of about what the Note 7 incident symptomises.

The 7 works underwater and checks its user’s identity by scanning the user’s iris. There will be no progress in this world unless radical new products like the 7 are allowed to fail a bit. Moreover, in America there were few problems for 7 users. As soon as word got out about its defects, telcos such as AT&T, Sprint, T-Mobile and Verizon were quick to offer users other arrangements. The 7 affair has been a debacle, not a disaster.

Nor will Samsung go up in smoke because of the 7. It is a company with a turnover of €177bn and an R&D budget that, at a 2014 figures of more than €12bn, was worth a creditable 7.9 per cent of sales and was topped, worldwide, only by Volkswagen. Better still, these massive figures cover just the electronics bit of the Samsung chaebol, a sprawling conglomerate that also handles construction, trading, chemicals, electromechanical gear and more besides.

Samsung’s buoyant chip and display sales will help it overcome the $1.8 billion it spends recalling and replacing its iffy phones. Its mainstay phones, which are cheap compared with the niche 7, will be unaffected. What with the massive job cuts the company is putting through this year, Samsung anticipated a reasonable growth of profits for the third quarter of 2016.

Batteries aren’t us

Bourgeois economists love to rave about the market. Well, they should accept that mass markets, with all their faults, must be allowed to test the merits of new products in practice, beyond checks in the laboratory. Anyway, like Tesla cars, hoverboards and electronic cigarettes, all of which have caught fire, the problem with the Note 7 was not really the product so much as issues surrounding its battery. Of course, batteries vary; but the fact is that combining real advances in their size, heat, cost, speed of charging and duration of discharging has proved tricky. Since 1976, even simple 10 per cent improvements in the efficiency of high-tech batteries (as measured in labs, not real life) have mostly taken more than a decade to achieve.

Incidentally, none of these snags with batteries have made Greens halt their premature hosannas to battery storage of solar and wind power.

Recalls are us

As the specific and general examples of the 7 and batteries confirm, today’s capitalism faces crises of ham-fisted new product development and slothful technological innovation. For proof, look at how manufacturers now make more and more products that are defective. In the US, Samsung washing machines have had problems. In the US, car makers of all sorts felt they had to take back a record 51.2 million vehicles over 868 separate recalls in 2015.

By no means all of these car recalls may have been technically justified. Many recalls are simply made out of fear: fear of litigation. Since at least 2008, an army of lawyers and insurers has publicly played upon this fear, and within the supposedly uniform European Union there are countless national variants in regulation. No wonder manufacturers and product exporters, most of which are only now learning how to add services such as product recall to their hardware offers (‘servitisation’), worry about being too innovative too soon. They don’t want to be left picking up the pieces of products that, perilous or not, they rightly fear may be made subject to regulatory sanction and social stigma.

Conclusion

The schadenfreude enjoyed by the media over Samsung’s setback doesn’t just follow from the fact that scary news sells. It follows from a deep-seated cultural pessimism about what is possible and desirable in innovation. Stock markets marked Samsung’s shares down by excessive amounts, and, in gleeful style, sages rushed to repeat the familiar but ridiculous mantra that ‘reputational’ damage to the company’s brand would afflict every one of Samsung’s products, not just handsets.

As for the company’s mobile phones themselves, one technology website concluded: ‘The Note 7 was a flagship device with flagship performance and a flagship price tag – if Samsung couldn’t nail down the quality on one of its most important phones of the year, how does it expect us to trust it enough to build safe new ones?’.

Yep, let’s give up on Samsung’s mobile phones. Too much could go wrong; flames could engulf us all. In short, let’s recall the whole idea of the future.