@Samsung | Planning To Sell Refurbished Premium Smartphones
Samsung Electronics may start selling refurbished premium smartphones as soon as next year, according to a report Monday. The used devices that would be sold under the plan will be those returned to the company by customers who opted for one-year upgrade deals in markets like the United States and South Korea.
Citing an unnamed person who had direct knowledge of the plan, the report by Reuters only said the refurbished phones would be sold at a lower price than boxed pieces. The person refused to say how much the discount would be, how many refurbished devices Samsung would sell or which markets the company would sell such devices in.
The world’s largest smartphone company by volume may be taking a slice out of Apple’s book to sustain its earnings momentum, which has been buoyed by the release of the Galaxy S7 devices and should also profit from the upcoming Note 7 rollout. Apple already sells refurbished iPhones in numerous markets, including the U.S. and has been lobbying to sell them in India, which it sees as its next big growth market.
Unlike Apple, however, Samsung sells smartphones across a wide spectrum of prices.
Refurbished versions of used high-end smartphones will naturally sell at a discount and could potentially eat into the sales of Samsung’s mid-priced devices. The South Korean company’s flagship Galaxy devices sell at about 49 percent discount from their original price in the U.S. a year after launch, BNP Paribas said. According to a February 2015 report by Gartner, “the worldwide market for refurbished phones that are sold to end users will grow to 120 million units by 2017, with an equivalent wholesale revenue of around $14 billion.”
The move may also help Samsung make inroads into the lucrative Chinese market, where it is currently not even in the top five smartphone sellers.
Samsung’s refurbishment program, details of which the person said could be finalised as early as 2017, could help the firm generate revenue from dated high- end smartphones returned by users upgrading to newer versions. The company’s latest premium phones, the Galaxy S7 and Galaxy Note 7, have received favorable reviews, suggesting cheaper, refurbished versions could be popular. At U.S. carrier Verizon Communications, the Galaxy S7 edge with 32-gigabyte storage retails for $792 without subsidies, while the Note 7 costs $864. The program could help Samsung defend market share in emerging countries by bolstering mid-tier sales.
Refurbished phones could also appeal to enterprise clients who want certain security or software products pre-installed on phones to give to their employees, the source said. The risk of offering refurbished devices is that they could potentially cannibalize sales of Samsung’s other mid-tier devices.
Expectations for solid smartphone sales helped Samsung shares to a record 1.675 million won each on Friday, taking two-day gains to 7 percent and adding $15 billion in market value. The shares traded down 0.36 percent in Seoul on Monday.