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May 26, 2016

How smartphone leasing could transform enterprise mobility

Analysis: As Samsung launches a Galaxy S7 leasing programme, what impact could this have on the business mobile market?

By Alexander Sword

The news that Samsung has launched a pilot programme in France allowing customers to lease devices and change the model when a new one is released might prompt questions from UK customers as to when they can get the same deal.

The deal, called Up2you, covers the Galaxy S7 and S7 Edge and the plans for the models cost €27 and €30, respectively.

According to La Tribune, product marketing director for Samsung France Guillaume Berlemont said that Up2you will be extended to other markets if it is successful.

He said that the company wants 10-15 percent of its high-end smartphone users to be with Up2you within two years.
T-Mobile offers a leasing programme in the US to the consumer market.

In the UK, the only phone leasing model available is offered by O2, which offers the latest phone on a 12-month Business contract with no up-front costs. The contract is available with the company’s business tariffs.

Particularly in the business market, the leasing model has considerable advantages. Rather than being tied down into a long-term contract with a device or set of devices that may quickly become obsolete, the business users will always have access to the latest functionality.

Rob Bamforth, Principal Analyst at Quocirca, says that this will get around the challenge of employees wanting to have the latest thing.

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This is particularly true when employees are using corporate-issued smartphones perhaps alongside their own device.

"Nokia used to go through quick releases of new handsets," he says. "There would be a tendency for business users to ‘accidentally’ break their phones to get an upgrade. People don’t want to feel they are being left behind by new technology."

Bamforth says that the model might make sense at a time when smartphones are still on fairly regular release cycles and the demands of software are steadily increasing.

From a carrier perspective, the key question would be what to do with the old smartphones.

"There may be opportunities for them to for example move them on to other markets," says Bamforth.

An advantage though would be the possibility of getting people onto longer contracts.

"If you could sign people onto three or five year rolling contacts it could be quite appealing to large enterprises.

Outside of the business market, the deal may appeal to consumers who have a tendency to upgrade.

The fact that O2 has had such an offer in place for around five years and there has not been any competition from other operators possibly indicates that it is not yet delivering results.

However, there is strong potential there if the various barriers can be surmounted.

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