Samsung Electronics, the South Korean technology giant, plans to launch a program to sell refurbished used versions of its premium smartphones as early as next year, according to unknown source. It should be a way to sustain earnings momentum after reviving its mobile profits by restructuring the 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 percent.
One of the top smartphone makers 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. Samsung would then re-sell these phones at a lower price. The source from the company declined to say for Reuters, how big a discount the refurbished phones would be sold at, which markets the phones would be sold in or how many refurbished devices Samsung could sell.
Samsung would have multiple benefits from releasing such plan. Consulting company Deloitte says the used smartphone market will be worth more than $17 billion this year, with 120 million devices sold or traded in to manufacturers or carriers, which is around 8 percent of total smartphone sales. Some market experts expect the used market to grow fast as there are fewer technology breakthroughs. The program could, also, help Samsung defend market share in emerging countries, like India, by bolstering mid-tier sales, and to 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.
With applying this plan Samsung will join Apple which sells refurbished iPhones at markets like the USA for years. Now, Apple tries to penetrate on markets like India, where the average smartphone sells for less than $90, and Samsung is, probably, going to join them at the trip. But what will buyers get from "new" cellphones? The answer is simple. Refurbished phones are fitted with parts such as a new casing or battery. The software is pretty much the same, but it's still useful if it can be updated.
Nobody wants to buy something that is selling as "new", or even worse, to buy "a pig in a poke". The question is how would people react on a refurbished Galaxy in the shop. The time will show how the emerging, but not so rich markets will react on that kind of offers, and how much will Samsung earn from this plan, according to their projections.
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