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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  • speculatrix - Tuesday, October 8, 2013 - link

    I have a Note 2, and have people happy to buy it off me if I bought a Note 3, which has been planned for early 2014.

    But now, I'm not going to be upgraded if this mess isn't sorted out to the benefit of the consumer.

    Also, system updates are now disabled, and I won't be accepting new Samsung firmware updates until others have tested them and confirmed they won't region-lock my phone.

    What's next, Samsung? Installing a hidden carrier-iq app? Fully locking bootloaders? Stopping the sale of any sim-unlocked phones? Blocking the use of non-Samsung microSD cards? Removing multi-band capability so phones can only work on one carrier in one region?

    Basically, I don't trust Samsung any more, and they won't be getting my money.
  • TerdFerguson - Tuesday, October 8, 2013 - link

    The author is deluded to equate saving money via shopping different markets and currencies with taking money from the OEM. If I want to sell apples for a dollar a piece to one neighbor and a dime a piece to another neighbor, I shouldn't be shocked when some party begins arbitage and I don't see any way of rationalizing these sales as a 90 cent loss per apple. In general terms, any economic system where tiered distribution is either required or prohibited is a corrupt system.

    I'm glad that news outlets are picking up stories like this, but I could absolutely do with less armchair economic commentary. Present the facts and lose the personal bias and ignorance.
  • robinthakur - Wednesday, October 9, 2013 - link

    I disagree. Anand's reviews are so technically detailed, that he rises above accusations by some of being pro-Apple because he can back up his assertions. If he singled out Samsung for criticism, though they deserve it in this and many other cases, like the benchmark cheating, it might seem slightly skewed. At no point are they saying it is OK, they are letting you know that Samsung is doing it and the decision to buy or boycott is left upto you.

    I haven't personally bought Samsung for a number of years because I disagree with their shady business practices and have had several run-ins with them over warranties and devices such as fridges and TV's that stopped working and poor service which takes months to get parts replaced. They also have been subject to a number of class action lawsuits for using substandard parts in their devices, chiefly capacitors which cause the devices to die shortly outside warranty periods. Funnily enough, if the service incident is about a fault related to a class action lawsuit where they have been found in the wrong, they are happy to fix it next day or thereabouts. I will not add to their coffers.
  • Arbie - Wednesday, October 9, 2013 - link

    Indignation here is unlikely to impress Samsung. It may be better to email their public relations company:
  • piroroadkill - Thursday, October 10, 2013 - link

    The only Samsung product I'm a fan of is their SSDs.

    Their TVs, their white goods, their phones, they can keep them.
  • mauler1973 - Friday, October 11, 2013 - link

    All I see being accomplished with region locking is the ability for manufacturers to be able to pice fix. The analogy to the automotive industry is not totally accurate to the scenario of smartphone region locking as the automotive manufacturers have to deal with far different safety standards country to country.
  • EWTech - Saturday, October 12, 2013 - link

    Must be a slow news day. This is a pointless article. I use a GSM phone from AT&T but I never travel outside the US. Even if I did there are other ways around this. Use an older feature phone with a local SIM. Buying a Euro spec phone is a bit silly since the frequencies and carriers are different, though it varies. It is interesting that AT&T has a service to allow for service outside of the US. Expensive.
  • Cumulus7 - Monday, October 14, 2013 - link

    I postponed the buying of two new smartphones for the time beeing.
    If Samsung continues its current course its gonna be HTC or Sony for me.
    I am totally unwilling to buy a crippled phone for full-price.
    I "could" understand if they region-locked carrier-subsidized phones, but not full-price phones on the free market.

    Goodbye Samsung for now..... (and i am cursing myself for buying a S3 four months ago for my parents).
  • Nenad - Tuesday, October 15, 2013 - link

    I bet HTC and other competitors could benefit from this - they do not have so large sales to feel need to protect US dealerships, and they could benefit from new customers.

    And I would be one of those new customers that will leave Samsung if this is implemented for S5. I had S1, S3 and now S4, and in every one of them I used other SIMs when traveling outside of Europe.

    ONLY way that I would consider buying such locked phone is if Samsung can ensure me that if I go to US and buy SIM+sub in AT&T or T-mobile, they could install new SIM and unlock it for me on spot in practically ANY of their shops.
  • TekGru - Monday, October 21, 2013 - link

    Hi Joshua,

    Are you representing Samsung/smart-phone industry here or the general consumer, end-user?
    This is supposed to be a site which takes a critical view of the products of various manufacturers and provide a logical summary of the advantages and disadvantage of a product for an end-user who may not be as aware or educated on the technical under pinnings of a product.

    Instead this article seems to take a technical view of the region-lock and works very hard to find earlier instances of similar manufacturer strategies(as if to condone the serious restriction on the freedom of a smart-phone owner after paying a mind-boggling sum to the Samsung). You are supposed to give a value advice-warning in the summary to prospective Note 3 owners about the undue risk they are taking by purchasing one. Coz That beautiful display, quad-core processor or the RAM/Internal Memory whose write/read speeds you waxed so eloquently about wont matter if you can't make a simple phone call on your near $800 piece of SMARTphone.

    Increasingly Samsung has been channeling strategies which takes a dim view of the smartness of smart-phone owners; the same mistake which Nokia and Blackberry made and continues to make...Samsung doesn't care much of its competitors or their ability to compete.

    For example they offer their Exynos processors in Note 3 for the rest of the world(except US and Europe?)...which can't take UltraHD video and many consider Snapdragon 800 a better choice both performance wise and their support to open development.

    Region locking is Samsung's way of ensuring that even if consumers want the Snapdragon 800 Note 3, they are forced to use the Exynos version..thereby padding Samsung's bottom line better(More profit when using own components - Exynos processor).

    As consumers, end-users and geeks each one of us need to educate our friends, colleagues and family to avoid buying Samsung smart-phones unless and until Samsung draws back their consumer-unfriendly and monopolistic tendencies. As an Android lover I feel that LG, Sony and the Nexus line provide competitive choices to Samsung's hegemony...!

    And Anandtech & Joshua; we don't expect you to sound like cronies of anybody; we expect you to be partial to the consumer, not to the manufacturer...In short we expect you to be the powerful and knowledgeable voice of the ignorant end-user...

    A disappointed Anandtech fan,

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