$$\text{If p = "This device is of excellent quality" then is it safe to say that }\\ \neg p = \text{"This device is of terrible quality" ?} $$
When taking the negation, it means that the original proposition (p) is not true. So, It's not true that this device is of excellent quality. I believe that's the best way to express the negation. No one said that it's of terrible quality, it could be of medium quality but in any case, not excellent.
Is it a convention that a device can only be of excellent quality (=True) or of terrible quality (=False)?
Any ideas?
If you postulate that any device is either excellent or terrible, then deducing the device is of terrible quality if and only if it is not of excellent quality is valid. In general, however, your intuition is right, and a semantically correct rendition of $\lnot p$ would be "The device is not of excellent quality".
As to your edit, that is not a mathematical question but a worldly one. Formally, mathematics cannot speak about non-mathematical things; devices (in their most general form) are not mathematical objects, so there simply is no convention (and formulating one doesn't even make sense).