Samsung Rising: The Inside Story of the South Korean Giant That Set Out to Beat Apple and Conquer Tech
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- About the Author
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- Table of Contents
LONGLISTED FOR THE FINANCIAL TIMES AND MCKINSEY BUSINESS BOOK OF THE YEAR AWARD
Based on years of reporting on Samsung for The Economist, The Wall Street Journal, and Time, from his base in South Korea, and his countless sources inside and outside the company, Geoffrey Cain offers a penetrating look behind the curtains of the biggest company nobody in America knows. Seen for decades in tech circles as a fast follower rather than an innovation leader, Samsung today has grown to become a market leader in the United States and around the globe. They have captured one quarter of the smartphone market and have been pushing the envelope on every front.
Forty years ago, Samsung was a rickety Korean agricultural conglomerate that produced sugar, paper, and fertilizer, located in a backward country with a third-world economy. With the rise of the PC revolution, though, Chairman Lee Byung-chul began a bold experiment: to make Samsung a major supplier of computer chips. The multimillion- dollar plan was incredibly risky. But Lee, wowed by a young Steve Jobs, who sat down with the chairman to offer his advice, became obsessed with creating a tech empire. And in Samsung Rising, we follow Samsung behind the scenes as the company fights its way to the top of tech. It is one of Apple’s chief suppliers of technology critical to the iPhone, and its own Galaxy phone outsells the iPhone.
Today, Samsung employs over 300,000 people (compared to Apple’s 80,000 and Google’s 48,000). The company’s revenues have grown more than forty times from that of 1987 and make up more than 20 percent of South Korea’s exports. Yet their disastrous recall of the Galaxy Note 7, with numerous reports of phones spontaneously bursting into flames, reveals the dangers of the company’s headlong attempt to overtake Apple at any cost.
A sweeping insider account, Samsung Rising shows how a determined and fearless Asian competitor has become a force to be reckoned with.
ISBN-13: 9781101907252
Media Type: Hardcover
Publisher: Crown Publishing Group
Publication Date: 03-17-2020
Pages: 416
Product Dimensions: 6.10(w) x 8.80(h) x 1.50(d)
Geoffrey Cain is a foreign correspondent and author who has covered Asia and technology for The Economist, The Wall Street Journal, Time, The New Republic, and other publications. A resident of South Korea for five years and a Fulbright scholar, he studied at the School of Oriental and African Studies in London and the George Washington University. He is a term member of the Council on Foreign Relations.
1Read an Excerpt
Galaxy Death Star
“Leave your bags. Get off the plane immediately!” shouted the flight attendant.
Brian Green felt he’d entered a nightmare. The morning of October 5, 2016, Green had taken his seat on Southwest flight 994 at Kentucky’s Louisville International Airport, where he was preparing for a business trip in Baltimore. Ten minutes before takeoff, during the safety demonstration, he powered down his new Samsung Galaxy phone and put it in his pocket.
“I heard some popping that sounded like a ziplock popping open,” Brian later told a television crew in his southern accent, “and looked around to see what that was. There was smoke just billowing, pouring out of my pocket.”
He yanked his smartphone from his pants pocket and threw it on the carpeted floor.
“I didn’t want it to explode in my hand,” he said. Angry, thick, green-gray smoke was billowing out of it. The smoke spread several rows in front of him and behind him before dissipating throughout the rest of the cabin. The Southwest Airlines crew decided it was time to get everyone out.
By 9:20 a.m., the flight attendants had evacuated all seventy-five passengers and crew members. Emergency crews arrived to retrieve the smoldering device and to check the passengers for injuries. Fortunately, no one lost “a finger or a hand over it,” as Green put it—he had tossed the phone away just in time. The smoking piece of metal, plastic, and circuitry was so hot that it had burned right through the carpet. When airline mechanics pulled the layer of carpet away to reveal the subfloor underneath, it was seared and blackened.
Investigators from the arson unit at the Louisville Fire Department showed up on the tarmac, seized the device, and questioned Green. But Green, they quickly realized, had done nothing wrong. The problem lay in the phone that he had bought, loved, and admired.
The Galaxy Note 7 had been a source of trouble for two months in South Korea, in the United States, and around the world. But everyone had assumed the problem had been resolved. Since late August, Samsung had documented ninety-two instances of its new, much-heralded Galaxy Note 7 device overheating in the hands and homes and cars of its customers. A number of them caught fire thanks to what Samsung claimed were faulty batteries.
After three weeks of stumbling and stammering around the faulty device, Samsung had begun to recall the Galaxy Note 7s in the United States. As the company had advised, Brian Green had exchanged his new Note 7 at the AT&T store two weeks before his flight.
Green had studied the replacement phone and its packaging carefully. All indications on Samsung’s packaging were that the device was safe to use. The box was marked with a black square, indicating a replacement device rather than an original Note 7. When he punched the new phone’s IMEI—a unique fifteen-digit number on every device—into Samsung’s recall eligibility website, he got this recorded response: “Great News! Your device is NOT in the list of affected devices.”
After the evacuation, Brian called Samsung’s customer service line.
“I did everything I was supposed to,” he explained to the Samsung rep. “This was a recalled phone.”
The rep patched his message into a ticketing system. Green wondered when he’d hear back from Samsung. The company was slow to treat the incident as a public-safety issue. Instead, when journalists followed up on the incident, the company sounded skeptical that the phone was at fault.
“Until we are able to retrieve the device, we cannot confirm that this incident involves the new Note 7,” company representatives wrote to journalists repeatedly.
Investigators from the Consumer Product Safety Commission (CPSC), the federal agency whose job it is to test faulty and dangerous products, saw things differently. They initiated decisive and unusually strong legal measures. Citing “exigent circumstances,” CPSC investigators obtained a court subpoena and seized Green’s phone from the Louisville Fire Department the day after the fire. The team drove it to a laboratory in Bethesda, Maryland, where they got to work on an urgent succession of tests. The gravity of the situation was becoming clearer. It’s one thing for a company to issue a recall. It’s another for that same company to reissue replacement products—labeled safe—that continue to pose a severe danger to the public.
While Samsung remained unmoved by the public inquiry, thirteen-year-old Abby Zuis was picking up her siblings two days later at North Trail Elementary School in Farmington, Minnesota. Playing with her replacement Galaxy Note 7, she suddenly felt a strange burning sensation on her hand, “like pins and needles,” she recalled, “except a lot more intense.”
Her immediate reflex was to throw the phone on the floor—thankfully with no more than a burn mark on her thumb. The school principal raced forward and kicked the smoldering device out of the building.
“I’m glad it was in my hand and not my pocket,” Zuis told the media later.
“We thought we were safe with the new phone,” her father said.
Michael Klering and his wife woke up at 4:00 a.m. in his Kentucky home to a hissing noise. “The whole room just covered in smoke, smells awful,” Klering told a local radio station. “I look over and my phone is on fire.” Later that day, Klering started vomiting black fluid; he checked in to the emergency room, where he was diagnosed with acute bronchitis. Doctors determined that he suffered from smoke inhalation.
A Samsung representative contacted Klering and asked him to return the Note 7. Klering refused. Then he received a text message sent accidentally to him by a Samsung employee.
“I can try and slow him down if we think it will matter,” the text read, “or we just let him do what he keeps threatening to do and see if he does it.”
Klering was aghast. What the heck was going on?
“The most disturbing part of this is that Klering’s phone caught fire on Tuesday”—one day before the Southwest flight—“and Samsung knew about it and didn’t say anything,” wrote The Verge’s Jordan Golson. Warned Gizmodo’s Rhett Jones: “The evidence suggests that Samsung . . . now appears to be suppressing the information that replacements are dangerous.”
The reports continued to stream in with no decisive statement or action from Samsung.
A woman in Taiwan was walking her dog when her Galaxy Note 7 caught fire in her back pocket. In Virginia, another replacement Note 7 ignited on Shawn Minter’s nightstand at five forty-five in the morning.
“It filled my bedroom with . . . smoke. I woke up in complete panic.”
After the incident, Mintner visited the local Sprint store, where a salesperson offered him another Samsung Galaxy Note 7. Um, thanks but no thanks?
Then, hours later, another Galaxy Note 7 owned by an eight-year-old girl in Texas caught fire at a lunch table. Regulators, journalists, and the public were looking for answers from Samsung. Puzzled by the inaction of the global powerhouse, Samsung’s carrier partners started abandoning the company’s products. AT&T announced on October 9, four days after the evacuation of the Southwest Airlines flight, that it was discontinuing all sales and exchanges of the Galaxy Note 7. Other carriers followed suit.
Samsung announced that day it was “temporarily pausing” shipments of the Galaxy Note 7 to an Australian carrier. But the messages from the company were still hazy and unclear. Tens or possibly hundreds of thousands of people were still tapping away on these potentially explosive devices in their purses and pockets. But evidently the honor of the Samsung corporation came first.
“Samsung is confident in the replacement Note 7 and says they have no reason to believe it’s not safe,” the Australian carrier that paused shipments, Telstra, said in an internal memo.
“In other words,” CNNMoney correspondent Samuel Burke responded, “the phone wasn’t good enough for them [Samsung] to keep making it for now, but was okay for consumers to keep on using.”
As the crisis grew, customers seeking an exchange for the Galaxy Note 7 opened their email in-boxes to garbled, incomprehensible emails from Samsung’s customer service department—at times with the wrong order number attached, as well as other errors.
“As this is going to another company, when these exchanges are submitted, we cannot check the status of them for you until they submit you an order number for the new phone or tracking information,” wrote a customer service rep to a Note 7 customer who had been requesting a refund for almost a month with no response. “We have limited information on a lot of the process at this time. I hope this information is helpful and resolves the issues soon.” (Translation: We’re clueless about what we’re doing or what you should do.)
The brand’s reputation was in free fall, yet Samsung was failing to act.
“Does anyone here have a Samsung Galaxy Note 7?” Stephen Colbert asked on The Late Show with Stephen Colbert. “If so, please calmly remove yourself from the theater. Hazmat teams are waiting for you in the lobby.”
Acknowledgments ix Note on Research, Translations, and Korean Names xi Cast of Characters xiii 1 Galaxy Death Star 3 2 Shadow of Empire 31 3 Dynasty Ascendant 43 4 March of the Samsung Men 51 5 The Confucian and the Hippie 57 6 The Fifth Horseman 62 7 The Scion 73 8 Glorious Chairman! 82 9 Church Of Samsung 88 10 Go West, Young Heir 94 11 Seoul Searching 102 12 Design Revolution 113 13 My Boss the Shit Kicker 123 14 Sony Wars 132 15 Bordeaux 142 16 Unholy Alliance 150 17 The Emperor has no Clothes 154 18 Guardians of the Galaxy 167 19 Cult of Steve 180 20 Coke Pepsi Redux 185 21 The Next Big Thing 190 22 Galaxy Trilogy 195 23 The Ecosystem 202 24 White Glove 215 25 Milk 223 26 The Selfie That Shook the World 227 27 Return to Tradition 237 28 Vulture Man 243 29 My Kingdom for a Horse 256 Epilogue 277 Notes 287 Index 379Table of Contents