Samsung is planning to refurbish and sell the used mobile phone versions of premium devices by next year, according to a report from Reuters.
The South Korean mobile giant is attempting to find ways for sustaining the revenue by refurnishing or restructuring the device line up. The growth in mobile phone markets has slowly started hitting the plateau, so the company wants to increase the cost efficiency by operating at a margin of over ten percent.
Refurbishing High End Devices
There is a program in the offing whereby Samsung will refurbish the higher end phones that are returned to it by users signing up for the yearly upgrade program in South Korea and in the US. After refurbishing the phones, the company is planning to sell these devices at a reduced price. However, the plan has not yet been made public. There is also no news regarding the amount of discount offered for the refurbished phones, the market in which it would be offered and the number of devices that would be available in this way. It is also not clear as to the extent to which the devices would be refurbished or changed, but normally refurbishment involves fitting in a new battery or a casing.
Other Refurbished Phones
The resale value of an Apple Phone is around 69% of the original pricing after one year of the launch. On the other hand the Samsung Galaxy phones sell for around 51% of their original pricing after a year in the US market, according to information from BNP Paribas. Such types of refurbished phones can be of great help in boosting the presence of companies like Samsung in emerging markets like India, as the original high-end devices come at a very high price of around $800 and are beyond the reach of many consumers. Apple has sold many of its refurbished phones in the US as well as other markets, but the sales figures of these devices sold are not available.
Generating Revenue from Old Handsets
The program of Samsung for refurbishing its dated, high-end versions could be profitable. The company is likely to finalize the program in 2017 and will offer the refurbished phones that are obtained by users who have upgraded to a newer version. The latest phones of Samsung, the S7 and the Note 7 have received goo reviews and this suggests that the refurbished version sale could become a popular idea.
The program could benefit the company and help it in defending its market share especially in emerging countries. The mid tier sales could be bolstered and the refurbished device would surely appeal to businesses wanting a particular security product pre installed on the devices before giving them to employees.
However, there are some risks involved in the program if it is implemented. There is a possibility of cannibalization of the other mid tier phones and devices of the company. Yet, all this is mere speculation, as the company has not made any comments on the proposed program.
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