Samsung Electronics plans to launch its own direct-to-consumer device leasing program in the U.S. for its Galaxy smartphones, according to a Forbes report, following Apple's (NASDAQ: AAPL) introduction of such an initiative.
Galaxy S6 Edge+
The report, citing an unnamed industry executive with knowledge of Samsung's plans, said that Samsung could launch its leasing program in the next several months, although it could happen sooner. The precise pricing for Samsung's leasing program could not be determined, the report added. "It's a no brainer why they wouldn't do this," the unnamed source said.
"Samsung continuously evaluates trends and assesses business growth opportunities," a Samsung spokesperson told FierceWireless. "While we remain committed to growing our mobile business in the U.S., we don't comment on rumor or speculation."
Under Apple's iPhone Upgrade Program, which starts at $32 per month and allows users to upgrade their iPhone every year, customers get an unlocked iPhone 6s or iPhone 6s Plus with the Tier 1 carrier of their choice, and Apple's AppleCare+ warranty service.
Apple's program supports service from the big four nationwide wireless carriers: Verizon Wireless (NYSE: VZ), AT&T Mobility (NYSE: T) T-Mobile US (NYSE:TMUS) and Sprint (NYSE: S). Users can purchase one new iPhone every year. Prices for the service start at $32 per month for the 16 GB iPhone 6s and increase to $45 per month for the 128 GB iPhone 6s Plus. The program is financed through Citizens One Personal Loans.
Samsung is probably one of only a few OEMs outside of Apple that could launch a similar leasing program. Although its sales have slipped recently, Samsung remains the world's largest smartphone maker by volume, has a great deal of cash and financial firepower on hand and also has strong brand cachet in the U.S. market. The leasing idea could spread to other OEMs. Huawei already offers a program in partnership with a company called Affirm to offer loans to U.S. consumers so customers can pay off their devices over time in monthly payments.
Although Apple's program costs consumers more than many carriers' similar leasing or equipment installment plans, the offer does give them more freedom by being able to switch their carriers more freely. Some industry analysts have said that Apple is trying to strengthen its bond with iPhone users while diminishing the role of the carriers.
"Because the iPhone Upgrade Program isn't tied to a single carrier, you don't need a multiyear service contract," Apple states on its website. "If you don't have any carrier commitments, you're free to select a new carrier or stick with the one you have."
Samsung could be looking to do the same thing and enhance consumer loyalty for its Galaxy phones at a time when the carriers' shift away from subsidizing smartphones and toward leasing and EIP is exposing the high cost of Samsung's premier smartphones, like its new Galaxy S6 Edge, S6 Edge+ and Galaxy Note 5.
Like Apple, Samsung regularly releases updates to its Galaxy S and Galaxy Note lines every year. This year, Samsung has added more variants with the S6 Edge and Edge+ phones, which have dual-curved screens but cost more than the regular Galaxy S6. A leasing program similar to Apple's would presumably let customers upgrade to a new Galaxy phone every year, which could potentially lock in more customers to Samsung's ecosystem and boost sales.
Top U.S. carrier executives said last week at a Goldman Sachs investor conference that they are not too worried about Apple's leasing program because the carriers sell a lot more iPhones through their stores and sales channels than Apple does through its own, and that the program could help take the cost of financing device purchases off their balance sheets.
- see this Forbes article
- see this CNET article
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Article updated Sept. 21 at 2:20 p.m. ET with a statement from Samsung.