Galaxy S7 is helping with popularity of 20% discount rate system (Choice Contract Discount System). As consumers were informed that it is more advantageous to receive 20% discount rate rather than funding from mobile telecommunication businesses when they purchase Galaxy S7, many customers who purchased Galaxy S7s joined this system. Close to 1 million people have joined this system in just 45 days since the last day of January when there were little bit more than 5 million members of this system, making the number of members of this system close to 6 million.
According to Lotte Hi-Mart on the 15th, 80% of customers that purchased Galaxy S7 and S7 Edge during last weekend (11~13) joined this system. This is a value that is calculated by asking customers that had visited 440 Lotte Hi-Marts over the weekend and it basically indicates that 8 out of 10 people that purchased Galaxy S7 and S7 Edge joined this system.
“After Device Distribution Improvement Act was enforced, more people are making purchase after comparing phones meticulously.” said a representative for Hi-Mart. “Many consumers know that it is more advantageous to choose this system rather than to receive public funding right after premium models are released.”
Until end of last year, only few people that were interested in mobile telecommunication businesses knew about this discount rate system. However as Galaxy S7 was about to be released, many press had made headlines about how one must join this system no matter what if he or she were to buy Galaxy S7. Level of interests had increased rapidly especially when Ministry of Science, ICP and Future Planning (MSIP) opened up a site in early January that allows people to check if they are qualified to use this system or not. Phone upgrade service called ‘Galaxy Club’ that was put out by Samsung Electronics also has increased number of people joining this system.
More people are beginning to choose 20% discount rate system in overall mobile telecommunication markets. 3 mobile telecommunication businesses calculated that about 50% of customers are currently using this system. This indicates that every 2 people who purchase phones, 1 of them will chose 20% discount rate system. Considering a fact that only 25% of customers were using this system in January and February, percentage has doubled in just a month. It is just a matter of time that number of people that are using this system, which was 5.81 million by end of last month, will surpass 6 million.
A reason why more people are joining this system is due to expensive premium Smartphones. Mobile telecommunication businesses or manufacturers do not set their public funding too high when new phones are released and this is why 20% discount rate system is more popular than public funding. When iPhone 6S was released last October, 90% of customers who purchased iPhone 6S from Lotte Hi-Mart in October joined this system. Because many premium phones such as LG Electronics’ G5, Samsung Electronics’ Galaxy Note 6, Apple’s iPhone 7 and others are expected to be released this year, popularity of this system will continue.
As sales of phones and rate systems are dividing, some people say that a market that allows customers to buy phones at markets and stores and open them up at mobile telecommunication businesses is opening up. It is expected that this market will introduce competitive system into cellphone sales and lower their prices.
“20% discount rate system is a special system that only exists in South Korea.” said Vice-President Jang Joong-hyuk of Atlas Research. “This system will play a huge role in changing cellphone distribution markets that are dominated by 3 mobile telecommunication businesses into a competitive system while creating a market that allows customers to buy phones at markets and stores and open them up at mobile telecommunication businesses.”
Staff Reporter Kim, Yongjoo | kyj@etnews.com