Samsung Reportedly Will Lease Its Phones to Consumers

By going directly to consumers, phone vendors can cut out the middleman. Samsung seems to be following Apple, which recently unveiled this type of program.

Samsung galaxy S6 Edge+, Samsung galaxy Note 5, Apple iPhone Upgrade Program, mobile carriers, iPhone 6S Plus, iPhone 6S

Samsung is creating a program that will allow smartphone leasing directly to consumers, bypassing mobile carriers as the primary means of getting its Galaxy phones into the hands of users, according to reports.

The effort would mimic the plans of Apple, which earlier this month announced its own iPhone Upgrade Program that will let consumers lease iPhones from Apple and get new devices once a year when new models are released.

The Samsung leasing initiative was reported Sept. 20 by Forbes, which said that the program could be launched in the next few months, based on information from an unnamed industry executive.

"It's a no brainer why they wouldn't do this," the source told Forbes. No additional information on pricing or other details for the fledgling program were announced.

Under the Apple iPhone Upgrade Program, the company will allow customers to pay a monthly rate for their device, starting at $32 per month for 24 months, and allow them to get a new model each year, according to an earlier eWEEK story.

The Apple leasing program was announced alongside Apple's revamped and updated iPhone 6s models during a two-hour media event on Sept. 9 in San Francisco where Apple CEO Tim Cook and a who's-who list of Apple executives paraded out new features and improved capabilities for the company's products. The new iPhone 6s includes a 4.7-inch display while the 6s Plus includes a 5.5-inch display, both of which are wrapped in a new stronger cover glass. Both new phones are built around Apple's fastest smartphone chip, the A9, which is a third-generation 64-bit chip.

Samsung has been hit hard in recent years by lower sales of its mobile phones, which have been losing ground to cheaper phones from Chinese handset makers, and from stiffer competition from Apple and other competitors. Much of the recent sales slump likely was due to consumers who were waiting to see the then-new iPhones and Samsung's own replacement for its earlier Galaxy S5 phone.

Samsung is still trying to figure out how to continue to hold its shrinking lead in the global smartphone market in a competitive atmosphere that has seemingly placed a target on Samsung's corporate back.

In its second-quarter earnings report, released July 30, the news for Samsung wasn't great. Revenue in the latest quarter fell 7 percent to $41 billion from $44.5 billion one year ago, and net profit dropped 8 percent to $4.9 billion from $5.3 billion in the second quarter of 2014.

The company's mobile products revenue, which includes smartphones, fell 6.86 percent in the second quarter to $21.7 billion, down from $23.3 billion one year ago. Samsung does not break out individual numbers for its smartphone and tablets sales. The mobile products unit's operating profit of $2.36 billion fell 37.6 percent from $3.79 billion for the same period one year ago.

The second-quarter news was yet another in a string of disappointing earnings reports for the company as its chief competitor, Apple, continues to rake in huge revenue and profits from its popular iPhone 6 and 6 Plus smartphones. Samsung had hoped that the April launch of its Galaxy S6 and Galaxy S6 Edge smartphones would help it dramatically battle back against Apple's iPhone 6 and 6 Plus, which came out in September 2014.

Samsung even held its special Samsung Unpacked 2015 preview event on Aug. 13, about a month before its normally scheduled September launches so it could try to beat Apple in the marketplace.

In August, Samsung invited iPhone users to take 30-day test drives of the company's latest Galaxy S6 Edge+ or Note 5 (pictured) smartphones, which officially went on sale Aug. 21. Any iPhone owner can participate in the Ultimate Test Drive after paying a $1 fee and registering their iPhone on the program's Website. Participants can choose from one of the two phones and will also receive an activated SIM card and a step-by-step instruction guide. They then have 30 days to choose whether they will buy the smartphone after they test or if they will return it, according to the company.

Full rules and eligibility requirements for the test drive program are available from Samsung. Participants are responsible for any damage to the phones while they have them and will be billed for replacements if they are lost. The last day to register for the test drives is Dec. 31.

Both the new Galaxy Edge 6+ and the Note 5 are extensions of existing flagship models, but they get improved performance and a wide range of upgraded components and features. For the first time, the two devices also share the same basic platform, including the processor, RAM, cameras, battery power and more.

The latest S6 Edge+ and the Note 5 phablet arrived just four months after the long-awaited launch of the company's redesigned Galaxy S6 and S6 Edge smartphones. Both the S6 Edge+ and the Note 5 include 5.7-inch quad HD Super AMOLED displays, 4GB of RAM—up 1GB from previous versions—and more powerful octa-core Exynos 7420 processors.