Samsung offers upgrade program for South Korea Note 7 customers

October 24, 2016 1:58 AM EDT

A model poses for photographs with Samsung Electronics' new smartphone Galaxy S7 during its launching ceremony in Seoul, South Korea, March 10, 2016. REUTERS/Kim Hong-Ji - RTSA41M


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By Se Young Lee

SEOUL (Reuters) - Samsung Electronics is offering an upgrade program option to Galaxy Note 7 customers in South Korea who trade in their recalled device for a Galaxy S7 phone, marking its latest attempt to retain customers.

In a statement on Monday, Samsung said customers who trade in their Note 7 phone for either a flat-screen or curved-screen version of the Galaxy S7 can trade up for a Galaxy S8 or Note 8 smartphone launching next year through an upgrade program.

The world's top smartphone maker permanently ended Note 7 sales due to continued reports of fire from the flagship device. In addition to offering refunds or exchanges for a Galaxy S7 smartphone, Samsung has already offered financial incentives amounting to 100,000 won ($88.39) to affected customers in South Korea.

Users in the upgrade program will need to pay only half the price of a Galaxy S7 device, rather than the full amount, before exchanging to the S8 or the Note 8, Samsung said.

In offering the Note 8 upgrade option, Samsung indirectly reinforced previous statements that the Note series will not be discontinued. The company said the availability of such a program in other markets will be dependent on the situation in each country. It did not elaborate.

Samsung has stepped up marketing and promotion for its Galaxy S smartphones to try to make up for some of the lost sales. The Note 7's collapse is already costing Samsung $5.4 billion won in operating profit between the third quarter of this year and the first quarter of 2017.

Some analysts say Samsung will need to offer incentives to affected customers as part of their efforts to limit long-term damage to its brand and reputation from the Note 7's failure.

The South Korean firm is facing legal challenges from customers, as well. Harvest Law, a domestic law firm, said on Monday one of its lawyers, Peter Young-yeel Ko, and 526 others have filed a lawsuit in a South Korean court against Samsung seeking compensation of 500,000 won ($442.61) per person. Samsung did not immediately comment on the suit.

The firm is also facing a proposed class action lawsuit from three Galaxy Note 7 customers in the United States.

(Reporting by Se Young Lee and Yun Hwan Chae; Editing by Muralikumar Anantharaman)



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