“Samsung’s proposed solution and their adjustments to the product,” he
said, “resemble the solution that you would come up with to address a
complex of factors, not just a simple battery failure.
“The packaging is completely different and the fastening mechanism in
the battery body has been changed,” he pointed out. “It’s been assembled in
a way that will no longer cause one part of the battery to be subject to a
large force, as in the Note 7.”
Whatever the reasons for the upgraded designs—perhaps a cautionary
decision to address any number of other potential factors—the tech world
had moved on.
CNET’s Jessica Dolcourt called the new Galaxy S8, released in April
2017, “the most beautiful phone ever.” TechRadar’s Gareth Beavis declared
it a “brilliant phone.”
Still, internally, one former Samsung employee told me that sales of the
Galaxy S8 weren’t as strong as they’d hoped—tainted, perhaps, by the Note
- Nonetheless, I was inundated with calls from Bloomberg and CNN.
“Samsung’s profits just hit record highs,” a reporter said to me on the
phone. “They’re overtaking Apple as the most profitable tech company in
the world. But why? Isn’t Jay Lee in jail? Their Note 7 just caught fire six
months ago.”
It was part of the genius of Samsung’s business model. Samsung was
rocketing upward into record profits each quarter, pushing the South
Korean stock market to all-time highs. With profits of $12.1 billion in the
second quarter of 2017, Samsung had overtaken Apple as the most
profitable tech company in the world.
But its success was about far more than smartphones.
“This is the house that Jay Lee’s father and grandfather built. The
investments they made twenty, thirty, forty years ago had the long term in
mind,” I explained, referring to Samsung’s LCDs, NAND flash memories,
and cellphone batteries, many of which were used in the iPhone. “Samsung
is picking the fruits of the harvest. When the semiconductor business falls,
Samsung can profit from smartphones. When the smartphone business
declines, Samsung can make a profit from displays. After that, maybe
semiconductors will get profitable again. It’s the cyclical nature of
Samsung’s businesses.
“Jay Lee,” I went on, “is not that relevant to the day-to-day business.
The business can run itself.”