What is Old is New Again: Market for Second-Hand Smartphones Exploding

by Matt Klassen on February 24, 2015

While recycle and resale options have long existed for smartphones, they haven’t always been popular, with studies as recently as 2013 showing that the vast majority of smartphone users either kept their old phones stashed away like some technological paper weight, or simply threw them in the garbage. Further, the vast majority of those looking to replace their smartphone were interested only in new devices, as the second-hand market offered little in the way of choice and features.

The fact of the matter has long been that while some smartphone users dump their phones into the secondary market, those phones are often shipped off to developing markets where they are still viewed as cutting edge, offering little to a mature North American mobile market clamouring for the latest and greatest.

But although for mature markets the avoidance of the secondary market has always been because the used phones available are already obsolete, with the proliferation of early upgrade programs and the abolition of the three-year contract the mobile market suddenly finds itself awash in high quality used  smartphones available at a fraction of the price. Couple the availability of quality second-hand mobile devices with a growing number of people looking for ways to tighten their purse strings, and suddenly a reasonably high end used smartphone at a steep discount starts to look very, very good.

Last week market research firm Gartner released a report regarding the growth of the second-hand smartphone market, estimating that the used-mobile space will roughly double in size to 120 million units, or some $14 billion, by 2017.

“With consumers in mature markets upgrading their smartphones every 18 to 20 months, the inevitable question is what happens to the old device?” said Gartner analyst Meike Escherich.

The growth of the second-hand smartphone market, CNET’s Roger Cheng notes, “has been the increased awareness of the true value of the smartphones.” With carriers starting to move away from the subsidy sales model, whereby carriers subsidize the true cost of a smartphone in exchange for a two-year service contract, they are finding other ways to get smartphones into people’s hands in a way that keeps pace with the rate of new products hitting the mobile market.

As part of most service provider’s early upgrade programs consumers agree to turn in their old phones, leaving carriers with a significant inventory of high quality used smartphones that they then sell in turn to others at an affordably price.

Further, an entire market centered on matching smartphone sellers with buyers has emerged, with e-commerce companies like Gazelle, for instance, specializing in the sale of used electronics. Since introducing the option to buy used smartphones late last year, company CEO Chris Sullivan reports that second-hand mobile sales make up a fifth of his business already, and is expected to account for half Gazelle’s revenue in the next 12 to 15 months.

In fact, taking a page from the automotive industry, companies like Gazelle are starting to label used smartphones as “certified pre-owned” mobile devices, meaning they’re free from obvious defects and in working order. With such growth potential coupled with traditional rebranding, it won’t be long before old smartphones become the one’s people clamour over, offering functionality and reasonably cutting edge technology at a fraction of the price.

Did you like this post ? TheTelecomBlog.com publishes daily news, editorial, thoughts, and controversial opinion – you can subscribe by: RSS (click here), or email (click here).

Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

Previous post:

Next post: