Device manufacturers are being pushed deeper into the secondary mobile market as replacement cycles lengthen and resale economics increasingly shape customer lifetime value. Analysis from Stuart Blackhurst’s Finsur following CCS Insight’s recent Samsung event in London reinforced a view gaining traction across the industry: original equipment manufacturers can no longer leave refurbished and recommerce dynamics to third parties without strategic consequence.
Galaxy Club signals strategic intent
Samsung’s New Galaxy Club, launched in May 2025, represented one of the clearest attempts by a tier one OEM to intervene directly in residual value formation. The programme guaranteed customers 50% of recommended retail price when upgrading between months 12 and 15, explicitly targeting Samsung’s weaker resale performance versus Apple iPhone devices. Access was limited to selected direct channels, signalling a controlled experiment rather than a mass market rollout.
Programme design and mechanics
Eligible devices initially included the Galaxy S25 series, later extending to Flip7 and Fold7 models. Customers could purchase outright or via 24-month interest free finance, with optional insurance. The guarantee applied only within a narrow upgrade window and required devices to meet defined functional and cosmetic standards, with processing handled by UK based MTR Group, still part of Exertis Ireland.
Depreciation versus guarantees
Independent depreciation data shows first year value retention of approximately 42% for Samsung Galaxy S series devices and around 25% for foldables. The 50% guarantee therefore created an immediate gap between market reality and promised value, particularly acute for foldable models where the difference exceeded 20 percentage points. By contrast, recent Apple iPhone generations continue to retain higher residuals, although that advantage is narrowing.
Accounting friction emerges
Under IFRS 15 , an industrial standard adopted across over 140 countries, such residual value guarantees are treated as repurchase arrangements rather than outright sales. Revenue recognition is deferred, a financial liability is booked immediately, and devices remain on the balance sheet as depreciating assets. This accounting treatment suppresses reported revenue and inflates liabilities from the moment of sale, well before any physical returns occur.
Economic exposure builds quickly
Using conservative assumptions, the UK programme likely created an accounting liability of approximately € 40.5 million, with direct economic exposure near € 15.8 million once processing and resale gaps are considered. Foldable devices, while a minority of units, accounted for a disproportionate share of that risk due to steeper depreciation curves.
Materiality drives intervention
Against Samsung Electronics UK’s prior year net assets and profitability, these figures cross standard audit materiality thresholds. Even a capped, time limited programme would have attracted significant scrutiny, helping explain the decision to pause New Galaxy Club by October 2025, months before the first upgrades were due.
Circular ambition meets margin pressure
While the model reinforced ecosystem lock in and device recirculation, each successful upgrade compressed gross margins. Over multiple cycles, the economics risked eroding the very customer lifetime value the scheme aimed to enhance, placing loyalty and profitability in tension.
Implications for the market
Samsung’s experience highlights the structural challenge OEMs face when underwriting residual values without simultaneously lifting market prices. Certified Renewed programmes, tighter new device discounting and disciplined trade in offers will be essential if manufacturers are to reshape secondary pricing rather than absorb its costs.
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