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Program to Sell Refurbished Phones Planned by Samsung: Reuters

Program to Sell Refurbished Phones Planned by Samsung: Reuters
A program to sell refurbished used versions of its premium smartphones is to be launched as early as next year by Samsung Electronics Co Ltd, reported Reuters quoting sources with direct knowledge of the matter.
After reviving its mobile profits by restructuring its product line-up, the South Korean technology firm is looking for ways to sustain earnings momentum. Samsung wants to maximize its cost efficiency and keep operating margins above 10 percent even as growth in the global smartphone market hits a plateau.
In markets such as South Korea and the United States, users who signed up for one-year upgrade programs would be asked to return their phones to the company and such phones would be refurbished by the world's top smartphone maker.
The source reportedly said that Samsung would then re-sell these phones at a lower price. Questions like which markets the phones would be sold in, how many refurbished devices Samsung could sell and how big a discount the refurbished phones would be sold at were not answered by the source.
A Samsung spokeswoman said the company does not comment on speculation.
While refurbished phones typically are fitted with parts such as a new casing or battery, it was not clear to what extent the phones would be altered.
According to BNP Paribas, while Samsung's flagship Galaxy sells for 51 percent of the original price in the U.S. market, rival Apple Inc's iPhone has a re-sale value of around 69 percent of its original price after about one year from launch.
In emerging markets such as India, where high-end devices costing $800 or so are beyond most buyers, refurbished phones could help vendors such as Samsung boost their presence in such markets.
While not disclosing their figures, Apple concedes of selling refurbished iPhones in a number of markets including the United States. In India, where the average smartphone sells for less than $90, Apple is trying to sell such iPhones there.

Some capital to invest elsewhere or boost marketing expenditure could be freed up for Samsung and lower-cost Chinese rivals that have been eating into its market share could be fended off by Samsung through selling used phones.
With around 8 percent of total smartphone sales, 120 million old devices have been sold or traded in to manufacturers or carriers and Deloitte says the used smartphone market will be worth more than $17 billion this year. As there are fewer technology breakthroughs, some market experts expect the used market to grow fast.
"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 could be helped in its effort to generate revenue from dated high-end smartphones returned by users upgrading to newer versions by Samsung's refurbishment program even as details of which could be finalised as early as 2017, sources told Reuters.
Favorable reviews that suggested cheaper, refurbished versions could be popular, Samsung’s latest premium phones, the Galaxy S7 and Galaxy Note 7, have received favorable reviews. While the Note 7 costs $864, the Galaxy S7 edge with 32-gigabyte storage retails for $792 without subsidies at U.S. carrier Verizon Communications.

Christopher J. Mitchell

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