Every quarter we analyze and compile data about the mobile device trade-in market. We look to see which devices have held their value, which devices are being traded-in the most, and how U.S consumers benefit from these activities. At the end of the year, we look at the overall trend in the pre-owned smartphone market and see what’s different from the year before. What happened in 2017, and how does it compare to 2016?
2017 was an interesting year for smartphones.
Apple Inaugurates the Luxury Smartphone Market
The launch of the iPhone X solidified the idea of a luxury tier for smartphone brands. It was a device for the most well-heeled of consumers, with innovations such as a bezel-less screen and facial recognition software that Apple’s more mainstream brand, the iPhone 8, did not include.
Apple’s Dual Device Release Influences Trade-In
This was the first time in history that Apple launched two devices back to back. This, combined with slower than normal retail activities at the time of the iPhone 8 launch, had “cycle delay” impact on trade-in as consumers and the retail world awaited the iPhone X for comparison reasons and a final purchase decision.
New Device Launches and Retail Activities such as Promotions, Drive Returns
Generally, we see trade-in transactions increasing in the fourth quarter spurred by the introduction of a new iPhone and the promotional offerings that go along with it, as well as general seasonal promotions associated with back to school, Black Friday, Cyber Monday, and end of year festivities. 2017 was not any different.
As compared to same quarters in 2016, in 2Q and 3Q 2017 we saw an increase in Samsung device trade-ins driven by Samsung Galaxy S8 and S8+ strong promotional offers. Nevertheless, iPhone comprised the top traded devices in 2017, with only a single Android phone, the Galaxy S5, ranking in the top five.
In 2017 we also saw an increase in Samsung device trade-ins during Q2 and Q3, compared to the same quarters in 2016, as the Samsung Galaxy S8 and S8+ entered the market with attractive trade-in offers. In spite of this, the iPhones comprised the top traded devices in 2017, with only a single Android phone, the Galaxy S5, ranking in the top five.
One interesting thing that we’ve seen is only a modest increase in money returned to consumers through trade-in. In 2016, it was $2.101B and in 2017 it was $2.156B. What’s behind the slowdown in numbers?
Consumers Are Keeping Older Phones Longer
Innovations like facial recognition aside, it’s easy to say that most smartphone models are basically alike. Even mid-range phones now have fast processors, decent cameras, and good screen resolution. This lack of innovation combined with high retail price of the new devices (6% increase in 2017) and a lack of understanding among consumers about the deteriorating value of their older devices (both technologically and monetarily) caused both a slowdown in upgrades and associated trade-ins. See figure below for an example of a smartphone value depreciation schedule:
Back in 2016, the average age of all returned smartphones was 2.38 years. Returned iPhones had an average age of 2.51 years, and other smartphone brands averaged just over two years. In 2017, the average age of all returned smartphones was 2.59 years, an average age increase of 78 days. Returned iPhones averaged 2.73 years, and all other smartphones averaged 2.35 years. Non-iPhone smartphone brands had the highest average age jump – 122 days, suggesting that they’re beginning to hold their value better.
We’ve already discussed the fact that consumers who keep their older phones longer are missing the opportunity to capitalize on higher trade-in values and shows a clear need for consumers needing to be educated on the value they are missing out on. According to a joint study conducted by HYLA and Deloitte, annually, consumers are retaining a staggering 94M devices in their possession, either using them as hand-me downs or simply throwing them in a drawer. This is simply money down the drain.
For more information on global yearly trends in the pre-owned smartphone market, take a look at our free infographic today!