Samsung Is Planning To Sell You Refurbished Handsets

The logo of Samsung Electronics is seen at its headquarters in Seoul, South Korea, July 4, 2016. Picture taken on July 4, 2016. REUTERS/Kim Hong-Ji - RTX2K296

You might be able to get the latest Samsung handsets at a lower price, that is if you wouldn’t mind the sets are used. According to a report by Reuters the South Korean smartphone giant is introducing a new plan to sell refurbished smartphones to its consumers at lower prices. The source of the news was “a person with direct knowledge of the matter”.

Samsung offers a one year upgrade program to upgrade to the latest smartphone that they offer each year. Now this program requires that you hand in your old handset when you upgrade. Here’s where the refurbishing kicks in. They will take the old set and polish it and buff out the scratches, update the software and give it to you on a silver platter for a lower price than the original.

Samsung's One Year Upgrade Program
Samsung’s One Year Upgrade Program

Samsung’s quarterly report for Q1 2016 showed its largest profits in two years ($3.4 billion) after its struggle to come out on top. Last year’s Galaxy series really did it for consumers I guess. But the smartphone business is levelling off. It’s hitting a plateau (look at the iPhone sales dip over the last two years). So Samsung wants to minimize cost and maximize cost efficiency with an operating margin over 10%.

This refurbish program is obviously targeted for the low income countries within Samsung’s reach like India and China. Though there is no official confirmation on this, neither from the Reuters source or from the company itself (they declined to comment on any part of the story). However, even in India where the average phone is sold for $70, the flagships would be considered expensive. And China is building its own market for premium phones at a lower price (Xiaomi, OnePlus, Huawei) so there has to be a really high or equal value for money ratio to get folks interested.

Samsung Galaxy Note 7
Samsung Galaxy Note 7

Then again, the program could be popular in the US as well, putting high end smartphones in the hands of many households that haven’t been able to afford them until now.

There is one problem with this technique though, it could potentially eat in to profits from┬áSamsung’s mid range market. Why would consumers go for a mid range phone when they could get a slightly used flagship for the same price?

Samsung’s Rise To The Top

Samsung’s rise to the top has been steady. I don’t mean in terms of sales or market share but in terms of having the best smartphone. Samsung was looked at as the bridesmaid, never the bride. It’s Galaxy Series was seen as second tier compared to the iPhone for many years. But this year, with the release of the Galaxy S7 and S7 Edge, that was no longer true.

Samsung Galaxy S7 and S7 Edge
The Galaxy S7 and S7 Edge

These two phones were giants. Their camera wiped the floor with all the smartphone cameras out there and their endurance, battery life and water resistance set new standards for phones around the world. Samsung’s stock has steadily been rising ever since their release in March. And it continues with the Note 7. Until September there’s an eerie feeling that this is temporary but something tells me Samsung’s time has finally come.

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