SEOUL: Samsung Electronics Co Ltd plans to launch a programme to promote refurbished used variations of its premium smartphones as early as subsequent yr, an individual with direct information of the matter advised Reuters.
The South Korean know-how agency is on the lookout for methods to maintain earnings momentum after reviving its cellular income by restructuring its product line-up. As progress within the international smartphone market hits a plateau, Samsung needs to maximise its value effectivity and hold working margins above 10 per cent.
The world’s prime smartphone maker will refurbish excessive-finish telephones returned to the corporate by customers who signed up for one-yr improve programmes in markets corresponding to South Korea and america.
Samsung would then re-promote these telephones at a lower cost, the individual stated, declining to be recognized because the plan was not but public.
The individual declined to say how massive a reduction the refurbished telephones can be bought at, which markets the telephones can be bought in or what number of refurbished units Samsung might promote.
A Samsung spokeswoman stated the corporate doesn’t touch upon hypothesis.
It was not clear to what extent the telephones can be altered, however refurbished telephones sometimes are fitted with elements akin to a brand new casing or battery.
Rival Apple Inc’s iPhone has a re-sale worth of round 69pc of its unique worth after about one yr from launch, whereas Samsung’s flagship Galaxy sells for 51pc of the unique worth within the US market, in accordance with BNP Paribas.
Refurbished telephones might assist distributors reminiscent of Samsung increase their presence in rising markets similar to India, the place excessive-finish units costing $800 or so are past most consumers.
Apple sells refurbished iPhones in various markets together with the USA, however doesn’t disclose gross sales figures. It’s making an attempt to promote such iPhones in India, the place the typical smartphone sells for lower than $ninety.
Promoting used telephones might assist Samsung fend off decrease-value Chinese language rivals which were consuming into its market share, and unencumber some capital to take a position elsewhere or increase advertising expenditure.
Deloitte says the used smartphone market might be value greater than $17 billion this yr, with one hundred twenty million units bought or traded in to producers or carriers — round 8pc of complete smartphone gross sales. Some market specialists anticipate the used market to develop quick as there are fewer know-how breakthroughs.
“Some shoppers might choose to purchase refurbished, used premium fashions in lieu of latest finances manufacturers, probably cannibalising gross sales of latest units from these finances producers,” Deloitte stated in a report.
Samsung’s refurbishment program, particulars of which the individual stated could possibly be finalised as early as 2017, might assist the agency generate income from dated excessive-finish smartphones returned by customers upgrading to newer variations.
The corporate’s newest premium telephones, the Galaxy S7 and Galaxy Notice 7, have acquired beneficial evaluations, suggesting cheaper, refurbished variations might be common. At US service Verizon Communications, the Galaxy S7 edge with 32-gigabyte storage retails for $792 with out subsidies, whereas the Observe 7 prices $864.
This system might assist Samsung defend market share in rising nations by bolstering mid-tier gross sales. Refurbished telephones might additionally attraction to enterprise shoppers who need sure safety or software program merchandise pre-put in on telephones to provide to their staff, the supply stated.
The danger of providing refurbished units is that they might probably cannibalise gross sales of Samsung’s different mid-tier units.
Expectations for strong smartphone gross sales helped Samsung shares to a report 1.675 million gained every on Friday, taking two-day features to 7pc and including $15bn in market worth. The shares traded down zero.36pc in Seoul on Monday.
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