Recently, reports of Samsung region locking the Note 3 came out via Clove UK, which posted on its blog that the Note 3 would be completely unable to use a SIM card from a carrier outside of the region, and would not ship any Note 3 devices with a region lock outside of Europe.

Of course, while unprecedented in the smartphone industry, this sort of business has been happening for a very long time in the automobile industry, which has effectively banned grey importing to the US. While that isn't common knowledge, some may know that the Skyline GT-R is effectively banned from the US, which is a direct result of a ban on grey imports. The reason for all of this was a push by Mercedes-Benz USA to protect its dealer network and its own margins. In short, the story behind all of this is that grey imports were cutting into profit margins, as importers could easily take advantage of fluctuating exchange rates, and when all was said and done, going through an importer could net thousands of dollars in savings, all of which was effectively taken from the OEM. As a result, MBUSA and a coalition of other OEMs successful lobbied Congress to pass laws that made grey importing effectively impossible, which completely killed that industry.

While there are other possible justifications for region locking devices, looking to the past, it is evident that this move is done for similar reasons, albeit implemented at the software levels rather than enforced by law. While at first such a move threatened to have severe blowback due to the lockout of foreign SIMs for those traveling outside of the region intended for use, Samsung moved quickly to quell such fears, stating that the lock would only be for initial activation and that any region locked device would be able to be unlocked by a regional service center, however it seems that based upon multiple user reports, unlocked devices in certain regions have been completely locked out from using foreign SIMs. Recent information suggests that this lock is also shipping on many other unlocked devices that we're manufactured after July 2013, and such locks may arrive via OTA update for some devices. Due to their enormous marketshare and mindshare, Samsung is best placed to execute such a strategy, and stands to greatly increase margins from this move.

Even though Samsung is the first to do this in the smartphone industry, it is hard to say that such a move would not be pushed by other OEMs, as all would stand to profit from such region locking. While the automotive industry achieved this through legislation, it seems that smartphone OEMs are well-positioned to implement such features in software. While initial SIM locks would be easily bypassed by resellers, forcing the need to acquire an unlock code from a service center in the correct region would be extremely effective at killing grey market imports in the smartphone market, especially if the lock flag were in a partition with signature checks enforced like many carrier locks. It remains to be seen, however, whether the smartphone OEM would move in such a direction. While the automobile industry is nothing to be emulated, it is possible that the smartphone industry will follow in its footsteps.

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  • Dman23 - Monday, October 07, 2013 - link

    God, the way this article reads, you talk about how this is unfortunate but that it is somehow something to be expected... That's RIDICULOUS Reply
  • Dman23 - Monday, October 07, 2013 - link

    (Sorry, accidentally hit enter. There really should be a timed "edit" feature in the comment section that many sites already implement) Anyways, to finish my statement, this isn't something that should be tolerated or talked about like "well, it isn't great but it was bound to happen." It's only "bound to happen" if the public TOLERATES it. I for one will NOT be buying a new Samsung Note 3, even tho I'm a Android user and was hoping to upgrade from my 2-year Nexus 7.

    As consumers, we need to not only voice our legitimate gripes with this opportunistic and evil practice but also vote with our wallets and not buy the Note 3!!!

    There are plenty of other good options in the Android space that don't do these evil practices, all in the name of increasing their profit margins. That's the beauty of choice!! And by voting buy our wallets, we can make sure this doesn't proliferate in the smartphone industry because if it does, Consumers are the loser here.
    Reply
  • Impulses - Monday, October 07, 2013 - link

    2 year Nexus 7... what? It's been out like a year and a half no? How do you upgrade from a tablet to a phablet anyway... I'd agree with your sentiment in principle, I'm not Samsung's biggest fan to begin with, but voting with your wallet seems like a feeble recommendation given the general public's appetite for Samsung devices. Reply
  • Dman23 - Monday, October 07, 2013 - link

    Oh, come on. Saying that "voting with your wallet seems like a feeble recommendation" is bullshit. This is how a free market enterprise works. If enough people don't by "x" product (and in this case because of some bullshit region locking) then said company is going to react to that sentiment by getting rid of said "feature".

    And if you're going to say that never happens with such a big omnipresence company like Samsung, you need not look far into the past for only 1 such example. I.E. Microsoft. Why do you think Microsoft did a complete 180 degree turn on their ridiculous policy to implement online DRM check that WAS going to go into their new upcoming XBox 1 console?? It's because after they announced this ludicrous "solution" for online piracy, they saw the pre-order numbers of how many people were going to buy the PS4 in lieu of the X-Box One and they completely reversed their policy.

    This is EXACTLY why voting with your wallet is such a powerful thing in a free market society
    Reply
  • wiz329 - Tuesday, October 08, 2013 - link

    That sounds good in practice, but how is Samsung to know that the weak sales aren't due to the strength of another competitor, or any other myriad number of factors?

    You assume everyone who doesn't buy it will be because of said "feature" on "x product", and more importantly, Samsung knows the reason why everyone who didn't buy it was such a "feature." That's a lot of counterfactuals.

    In any industry, if a product isn't selling well, it could be for any number of factors.
    Reply
  • larkhon - Tuesday, October 08, 2013 - link

    maybe they'll see a difference in sales number in some markets (I would guess Asia for one) Reply
  • larkhon - Tuesday, October 08, 2013 - link

    maybe they'll see a difference in sales number in some markets (I would guess Asia for one) Reply
  • MarcusMo - Tuesday, October 08, 2013 - link

    Agreed. In the xbox one case there was an enormous amount of bad press. This is what made the difference, claiming it was voting with your wallet is strange, given that you can't even buy said product yet to begin with.

    However, this is why it is important for the press and people to make a stand and show our outrage when we discover new practices we don't agree with. "Unfortunate, but expected" sounds a bit too complacent in my ears. And i guess that is what Dman23 referred to as well.

    I for one really disagree with the practice of region locking cell phones. I just bought a Moto X of ebay since it wasn't for sale here in Sweden. I'd like to enjoy this freedom in the future as well. I'm fine with region locking globally available phones however (given that they are released at the same time and with the same specs worldwide).
    Reply
  • Disorganise - Wednesday, October 09, 2013 - link

    "I'm fine with region locking globally available phones however (given that they are released at the same time and with the same specs worldwide)." - I'm not. I was lucky enough to live in Indonesia until recently, and travel to Vietnam, UK, Holland and Singapore. I bought my phone (S3 LTE) when I was 'home' in Australia, though it happened to be a Hong Kong import. My travels saw me purchasing and using SIMs in Indonesia, Vietnam, UK and of course Australia.

    I very much doubt Samsung will foot the roaming data expense, and nor will they offer a free loan phone at the airport. SIM locking is already a terrible practice. let's not allow region locking to be added to that.
    Reply
  • thecouchguy - Friday, October 11, 2013 - link

    I bought my phone in Australia and have travelled in Thailand for 4 weeks and am currently in Norway for 2 years. I can't afford a new phone every region I travel in. I was considering a note 3 as a friend of mine has a note 2 and i was really impressed. I love to travel. Samsung will not get my money.

    I'm lucky I'm into tech sites and I know of this now. Imagine the rage people will feel when they find out the hard way. Then that rage spreads through word of mouth. Not enough to take down the mighty Samsung but certainly a blemish. Stuff em, I'll buy a Sony phone, at least they are waterproof as well.
    Reply

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