After Apple, Samsung Intends To Bank On Refurbished Phones

After handset giants Apple has shown interest in selling refurbished mobile phones, Samsung Electronics now reportedly planning to launch a program to sell refurbished used versions of its premium smartphones. Samsung will refurbish high-end phones returned to the company by users who signed up for one-year upgrade programs in markets such as South Korea and the United States, Reuters reports.

According to the report, the move is aimed at sustaining earnings momentum after reviving its mobile profits by restructuring its product line-up. As growth in the global smartphone market hits a plateau, Samsung wants to maximize its cost efficiency and keep operating margins above 10 per cent. However, the company has refused have such plans and said that it does not comment on speculation.

Rival Apple’s iPhone has a re-sale value of around 69 per cent of its original price after about one year from launch, while Samsung’s flagship Galaxy sells for 51 per cent of the original price in the US market, according to BNP Paribas.

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Apple sells refurbished iPhones in a number of markets including the United States, but does not disclose sales figures. It is trying to sell such iPhones in India, where the average smartphone sells for less than USD 90. It is to be noted that Apple CEO Tim Cook had expressed intentions to sell refurbished iPhones in India which was strongly opposed by other smartphone brands. After mounting pressure from smartphone brands on Apple’s proposal the government disappointed Apple by rejecting its proposal.

Selling used phones could help Samsung fend off lower-cost Chinese rivals that have been eating into its market share, and free up some capital to invest elsewhere or boost marketing expenditure.

Deloitte says the used smartphone market will be worth more than USD 17 billion this year, with 120 million devices sold or traded in to manufacturers or carriers — around 8 per cent of total smartphone sales. Some market experts expect the used market to grow fast as there are fewer technology breakthroughs.

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“Some consumers may prefer to buy refurbished, used premium models in lieu of new budget brands, possibly cannibalizing sales of new devices from those budget manufacturers,” Deloitte said in a report.

Samsung’s refurbishment program, details of which the person said could be finalized as early as 2017, could help the firm generate revenue from dated high-end smartphones returned by users upgrading to newer versions.

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