SAN FRANCISCO — The burning Galaxy Note 7 is singeing Samsung with consumers. Badly.
The Korean electronics giant said late Tuesday that 500,000 replacements for the phablet-sized phones, recalled last week because of problems with igniting batteries, had arrived in the U.S. and would be available for exchange Wednesday. So far it's exchanged 25% of Note 7 devices owned by U.S. consumers. A Samsung spokeswoman said a "vast majority" have opted for another Galaxy smartphone.
But a recent survey suggests many of the original buyers, the fans who rushed to get the critically acclaimed phone in the first weeks, may avoid the Note 7 on the second go-around.
SurveyMonkey found more than a third of those surveyed who own the phone say they will opt for a refund rather than a replacement model, according to an online poll of 507 American adults this weekend.
About 35% said they would seek a refund, while 26% said they will buy an iPhone from Apple, Samsung's major competitor in the U.S. (SurveyMonkey did not ask consumers which other non-Samsung phone they would prefer.) Another 21% said they would opt for a different Samsung phone.
Most telling, only 18%, or less than one in five, said they would stick with the Note 7.
If consumers follow through on their initial sentiments, Samsung could take a financial bath in refunds and potentially lose millions of smartphone sales. Note 7 was well received after its August launch, selling more than 2.5 million units in its first few weeks and posing a possible threat to the new iPhone 7 and iPhone 7 Plus, which debuted in September.
The survey's results foreshadow tougher times for Samsung after the 1 million-phone recall, which analysts predict could cost the world's biggest smartphone seller $904 million.
The frustrations of Note 7 users is epitomized by the travails of Eric Fleming, a 30-year-old product manager in San Bruno, Calif., who did not participate in the survey. "I have nowhere to go. I will lose $200 to $300 because of the recall," he says. "I feel at a loss with Samsung after several years of loyalty."
Nonetheless, Samsung's recall could prove just a temporary hit to its corporate brand because its overall product quality is good, says David Rogers, a branding expert and faculty member at Columbia Business School.
As long as Samsung continues to communicate with the public, the corporate crisis should blow over in a few months, Rogers says.
“Samsung has built a strong following with consumers buying multiple versions of its phones,” Rogers says. “It is in a position of strength as the No. 2 brand in the smartphone category, after Apple. If this was a start-up, it would have a problem.”