2024-02-10 05:06:46
Samsung Electronics’ first artificial intelligence (AI) smartphone ‘Galaxy S24 series’ was officially launched in Korea on the 31st of last month. It attracted attention with simple AI functions that even middle-aged people can easily use, such as real-time foreign language interpretation and ‘Circle to Search’, which shows search results immediately by drawing a circle on the screen.
However, an unexpected variable appeared in the initial box office success. There is a controversy over price discrimination. Regarding the used phone compensation system introduced by Samsung, some consumers complained that the compensation amount was different depending on the country. When a consumer returns a used Galaxy phone, Samsung Electronics returns up to 150,000 won (Korean standard) in addition to the price of the used phone. The models eligible for additional compensation differ depending on the country, and even if you return the same old Galaxy phone, you will receive a refund. The gist of the controversy is that there is a difference in the amount received.
Currently, Samsung is applying a discount price when returning used phones at the purchase stage under the name of ‘trade in’ in global markets such as the United States.
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Galaxy’s domestic demand discrimination controversy spread to the National Assembly
The issue of compensation for used phones has spread to the National Assembly. On the 6th, Byun Jae-il, a member of the National Assembly Science, Technology, Information, Broadcasting and Communications Committee, a member of the Democratic Party of Korea, said, “If you return a used Galaxy Z Flip 4 512GB ‘Class A’ used phone and purchase a Galaxy S24, the maximum compensation price in Korea is 420,000 won, and the maximum for the 256GB model is 420,000 won. “The compensation amount is 390,000 won,” he said. “On the other hand, in the United States, under the same conditions, the compensation amount was $600 (approximately 800,000 won), which is regarding twice the amount in Korea. Even if the storage capacity was different, the compensation amount was the same.”
Rep. Byun went on to criticize, “Samsung’s separate discount policy in the North American market means it is providing profits earned from targeting Koreans to American users.” The claim is so-called ‘domestic discrimination’.
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Samsung: “Misunderstanding… Korea is the cheapest”
In response to this, Samsung Electronics’ position is that “the actual purchase price must be considered as the standard.” As Rep. Byeon argued, if you purchase the Galaxy S24 Ultra 256GB model with a current factory price of 1,698,400 won in Korea, you can receive used compensation of up to 420,000 won (512GB model) if you return the Galaxy Z Flip 4.
However, Samsung explains that if you add the ‘dotcom instant discount’ (up to 2%) and affiliate card discount (up to 100,000 won), you can purchase the Galaxy S24 Ultra 256GB for regarding 1.17 million won. Samsung explains that if you want to buy the same model in the United States under the same conditions, you can get a discount of up to $450 (regarding 600,000 won) as used compensation from the factory price of $1,299 (regarding 1.72 million won), so the actual purchase price is around 1.26 million won (including 10% VAT). . Assuming that credit card discounts are applied, Korea is cheaper by around 90,000 won.
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I checked…’American promotional price’
So why was the actual purchase price explained by both sides different? To conclude, the ‘compensation price of $600 (based on Galaxy Z Flip 4 512GB)’, which caused controversy over price discrimination between Korea and the United States, is a condition that does not currently exist. It was a limited-time promotion applied only during the pre-sale period in the U.S. last month, and from February onwards, used phone compensation in the U.S. only applied up to $450 (Galaxy Z Flip 4). Additionally, additional discounts and benefits were provided in Korea during the pre-sale period.
This is the result of checking device sales prices directly at Samsung.com in both countries. However, in the United States, there is no separate concept of ‘additional’ compensation, and the discount price is applied immediately on the screen. Methods in which the actual purchase price varies depending on additional support from mobile carriers were excluded from the comparison. In the U.S. market, carriers provide a lot of unconventional support to consumers who port their numbers to competing carriers, so if you use some expensive plans, you can purchase the Galaxy S24 Plus model without additional payment just by trading in.
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It’s not the cheapest… but it’s cheap.
However, as Samsung Electronics explained, Korea was not ‘always’ the region where you might buy the Galaxy S24 series at the cheapest price. Depending on the individual model, the cheap conditions when purchasing in Korea and the cheap conditions when purchasing in the United States were slightly different. For example, in the case of the Galaxy Note 20 5G model released in 2020, if you return the device according to the used phone compensation system in Korea, you can receive compensation of up to 370,000 won, but in the United States, you can receive compensation up to $400 (regarding 530,000 won).
There was little difference in compensation for used phones in the latest models, but in general, the compensation amount in the United States became higher than in Korea for older models. According to Samsung.com, the point that trade-in sales are supported for a much wider variety of models in the U.S. than in Korea was generally true. An official in the telecommunications industry said, “It may be Samsung’s last resort in the fiercely competitive U.S. market,” but added, “In the U.S., even Apple is competing with a trade-in system with unconventional conditions.”
However, when comparing major regions around the world where Galaxy smartphones are released, Korea and the United States were among the regions with the lowest factory prices. The Galaxy S24 Ultra 256GB model was priced at 1,698,400 won in Korea and $1,299 (regarding 1.72 million won) in the United States, but in Germany, the same device is being sold for 1,449 euros (regarding 2.07 million won). The amount of compensation for used phones in Europe was only 80% of that in Korea and the United States.
Heekwon Lee ([email protected])
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