Samsung’s Galaxy Note 7 recall could cost the company $1B

The price tag on Samsung’s comprehensive recall of all Note 7 devices shipped to date could be very expensive – Bloomberg reports an estimated total cost of around $1 billion for replacing all 2.5 million devices shipped since launch.

Samsung initiated a voluntary recall of the Note 7 last week after investigating scattered reports of exploding batteries in a small number of devices. The recall was instituted quickly, however, with Samsung looking to do as much as possible to decrease the potential impact on its brand reputation resulting from the defect.

The cost of the recall seems steep, but it actually only represents a small fraction of the company’s total projected revenue for 2016, and is unlikely to have much of an impact on its overall financial picture. The greater threat is from customer perception, and Samsung looks to be doing as much as it can (short of not having shipped faulty devices to begin with) to mitigate that impact. Consumer Reports, however, is calling for an official recall in partnership with the Consumer Product Safety Commission, to supplement Samsung’s existing action, in order to make it illegal to resell existing Note 7 hardware already shipped to customers.