REUTERS; Samsung Electronics is looking to sell refurbished premium smartphones however it’s not known what impact this will half on new phone sales sold by carriers and retailers.
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.
The move is also seen as a way for Samsung to increase their yield and keep operating margins above 10%. At this stage it’s believed that the refurbished models will be sold directly by Samsung via their online store.
According to Reuters Samsung will refurbish high-end phones returned to the company by users who signed up for one-year upgrade programs in selected markets, it’s not known at this stage whether Australia is one of the markets where the program will apply what is known is that the two initial test markets being considered are the USA and South Korea.
A Samsung spokeswoman said the company does not comment on speculation.
It was not clear to what extent the phones would be altered, but refurbished phones typically are fitted with parts such as a new casing or battery.
According to Reuters rival Apple’s iPhone has a re-sale value of around 69 percent of its original price after about one year from launch, while Samsung’s flagship Galaxy sells for 51 percent of the original price in the U.S. market, according to BNP Paribas.
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 $90.
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 – around 8 percent of total smartphone sales. Some market experts expect the used market to grow fast as there are fewer technology breakthroughs.
“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 finalised as early as 2017, could help the firm generate revenue from dated high-end smartphones returned by users upgrading to newer versions.
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.