Are Consumers Dumping Samsung Smartphones? - InformationWeek

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Mobile // Mobile Devices
Commentary
8/29/2012
09:47 AM
Eric Zeman
Eric Zeman
Commentary
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Are Consumers Dumping Samsung Smartphones?

Trade-in sites, research firms suggest consumers are unloading their Samsung phones in the wake of the courtroom loss to Apple. But some are just upgrading.

Apple iPhone 5 Vs. Samsung Galaxy S III: What We Know
Apple iPhone 5 Vs. Samsung Galaxy S III: What We Know
(click image for larger view and for slideshow)
Gazelle.com buys, sells, and trades electronic devices, including smartphones, tablets, laptops, and desktops. In the days since Apple won a patent infringement lawsuit against Samsung and sought to ban a swath of Samsung smartphones, Gazelle.com has witnessed a change on its site. It says the number of Samsung devices being traded in has jumped by 50% over the past three days, leading to a 10% drop in the value of those devices traded in.

"Consumers seem to be jumping ship," Anthony Scarsella, chief gadget officer at Gazelle.com, told MarketWatch. "We expect this trend to continue, especially with this latest verdict."

Gazelle.com reports that the glut of Samsung devices reaching its site has devalued them, which means consumers won't get as much cash back when they are traded in. So, has the verdict really devalued Samsung's devices, or is it simple supply and demand in effect here? Seems like the latter to me.

[ The Apple-Samsung trial had a number of winners and losers. Read Apple Verdict Could Boost Microsoft, RIM Smartphones. ]

MarketWatch goes on to point out that the resale value of Apple devices has historically been higher than that of competing devices.

"Even before the ruling Android products didn't hold their resale value as well as iPhones," said MarketWatch. "The Samsung S II--which sells for $199 new on a two-year contract, the same as a 16-GB iPhone 4S--currently goes for $90 on resale site NextWorth.com. The iPhone, however, sells for as much as $300 on NextWorth."

Global Equities, a research firm, decided to do some polling. It called up five AT&T stores, three Costco Stores, five Sprint Stores, and three Verizon Stores to see what was going on, reports CNN.

"Following Apple and Samsung August 24th verdict, customers rushed to buy Samsung Galaxy S III this weekend, with some stores reporting stock outs," said Global Equities' Trip Chowdhry.

The two reports suggest that consumers are dumping the Samsung Galaxy S II, which is one of the many devices the jury found to infringe on Apple's patents. Global Equities says they're doing this in favor of the Galaxy S III, the successor to the GSII. In other words, consumers might be dumping one Samsung device for another. I'm sure Samsung is crying in its milk.

It's worth pointing out that the Galaxy S II, while still a great phone, is 18 months old. It debuted in February 2011 and went on sale in the U.S. June 2011. The Galaxy S III is a dramatically superior device and worth the upgrade with or without the context of the Apple/Samsung drama in the background.

Further, tons of new devices have reached the market in the last few weeks and many more are set to debut. Next week alone as many as three new flagship devices are expected from Motorola, Nokia, and Samsung.

Last, resale sites have really ramped up the visibility of their trade-in programs. Some are even airing television commercials to make consumers aware of the value of their old devices.

The real effects of the trial's outcome are likely months away from being felt.

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Tom Mariner
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Tom Mariner,
User Rank: Strategist
8/29/2012 | 3:38:41 PM
re: Are Consumers Dumping Samsung Smartphones?
Interesting, most other authors seem to be saying that virtually all outlets are sold out of S3's because they think it is a great phone and want to get it before anybody else. The headlines generally include "skyrocketing" sales.
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