Even in the Quickly Growing Refurbished Smartphone Market Apple's Pricing seems to be Defying Gravity
Apple recently began selling refurbished iPhones officially through its online store for the first time earlier this month. You were able to trade in your iPhones for some time now, but Apple used a third party to refurbish and resell the older iPhones. Even Apple's refurbished iPhones cost more that some new Android smartphones to show you the pricing power that Apple has. Selling refurbished smartphones is becoming a huge business as subsidies lessen and Apple is getting on board this new trend.
According to a new IDC report "The market for used and refurbished smartphones has witnessed rapid growth over the past several years, thanks to a wide variety of trade-in and buyback programs across multiple channels and platforms. In the United States, most major carriers, retailers, and many online retailers (e-tailers) have implemented some type of trade-in strategy or platform to purchase used devices at a deep discount.
A new forecast from International Data Corporation (IDC) estimates that the market for used smartphones will grow from 81.3 million devices in 2015 to 222.6 million units in 2020, representing a compound annual growth rate (CAGR) of 22.3%.
Anthony Scarsella, research manager for IDC's Mobile Phone s program stated for the report that "The demand for refurbished smartphones is already becoming constrained in countries such as the United States. Mobile operators are the most constrained given the need for replacement devices for customers who have purchased device insurance plans.
In addition, used handsets provide an additional option for customers with subprime credit making them ineligible for equipment installment plans. With the average selling price for a used device expected to be $136 in 2020, the total market value for used devices in 2020 will be an estimated $30 billion."
Of course the average doesn't apply to Apple as you can see by our cover graphic. Apple's iPhone 6s standard and Plus models are nowhere near the $136 average selling price. Even in the refurbished market Apple is defying gravity. The demand for Apple iPhones is so high that their refurbished models cost more than half of new Android phones on the market today.
IDC's Will Stofega, program director, Mobile Phones added that "The used smartphone market will impact OEMs, mobile operators, and component suppliers, thus IDC has committed new resources to help customers understand and plan for this new and potentially disruptive force. Although there is a potential downside to mobile ecosystem suppliers, IDC believes that the used smartphone market also presents new opportunities to grow revenue and increase market share."
According to IDC's taxonomy, a refurbished smartphone is a device that has been used and disposed of at a collection point by its owner. Once the device has been examined and classified as suitable for refurbishment, it is sent off to facility for reconditioning and is eventually sold via a secondary market channel. A refurbished smartphone is not a "hand me down" or gained as the result of a person-to-person sale or trade.
If Apple can't refurbish an iPhone, they simply feed them to Liam who painstakingly and meticulously dismantles iPhones down to the bone or metal rib so that each part is carefully prepared for recycling.