As with every Apple launch, the levels of hype built up around the iPhone 8 were at an all-time high. 10 years on from when the first iPhone caused a stir in the smartphone market, consumers were expecting a device that would put their current one to shame. It didn’t.
It wasn’t just consumers who were awaiting the launch with bated breath, there were also high hopes from operators and retailers alike. There was an eager anticipation for a spike in demand for the new device and, with over $581 million iPhones returned to US customers through trade-ins and buyback programs last quarter, a much-needed boost to their revenues. But reality hit, and the device failed to live up to expectations, having an adverse effect on trade-ins. So, what went wrong?
As with many consumer products that are constantly in use, smartphones have not been designed with longevity in mind. There are still die-hard iPhone fans who upgrade each time a new device comes onto the market. But, there’s a fair few who have held onto their iPhone 5s and decided against an upgrade to the iPhone 6/6s or 7/7s. What users tend to experience is that their device starts to run slower than normal; battery life shortens; and iOS software updates become frustrating. In normal circumstances this is the natural time to upgrade and the launch of the iPhone 8 should have been the perfect opportunity for consumers to trade-in their iPhone 5s. But by failing to wow it’s public, the iPhone 8 encouraged users to hold on to their devices further, and wait for the 10-year anniversary iPhone X.
In previous years, we’ve seen people camping outside Apple’s flagship stores to be the first to get their hands on the latest offering and queues going on for miles. For the iPhone 8, we expected the same reaction. However, this simply wasn’t the case. And this was experienced for a second time when the iPhone X hit the stores.
The hefty price tag of the iPhone X also discouraged users to upgrade. Which brings us onto another pertinent point hampering iPhone trade-ins – the rising cost of devices. With new smartphones now hitting the $1000 mark, consumers are holding onto their old models longer. When they are upgrading, signing up to 24-month payment plan to soften the financial burden is now commonplace. Our own Q3 Mobile Trade-In Report is a testament to this, revealing the average age of a returned, used iPhone is on the increase up to 2.81 years. In Q3 2016, this was 2.4 years. It may seem a small move upwards, but we predict that this will continue if the industry does not adapt and change. So, what needs to be done?
The iPhone 8 launch has triggered some key learning for operators and retailers around the importance of upgrade and trade-in programs to the bottom line. Many remain hesitant to proactively offer early upgrades to customers, worried they will spend less money. What is not always understood is that everyone wins with a device trade-in – the consumer and the operator/retailer. Early upgrade programs allow operators to recoup the maximum value within devices, helping to generate revenue. Customers get some money back from an old device (which they are most likely to spend again with the operator and put towards a new device). The operator can even use these old devices for insurance plans – sending a customer a previously used, reconditioned device is much more economical than sending them a brand new one. Plus, trade-in programs are better for the environment, as they keep devices from ending up in landfills.
Quite simply, more education is needed within the industry on trade-ins programs. This isn’t merely a case of encouraging users to depart with their devices, but for them to actively encourage trade-ins as part of their offering. We’ve seen a start from several of the nation’s largest operators who have made used device trade-ins a website focal point; and in-store, one carrier has its reps wearing badges encouraging consumers to “ask me about trade-ins.”
HYLA Mobile is playing an important role in the used device ecosystem, collecting and re-distributing used mobile devices on behalf of operators, retailers, OEMs, and insurance companies around the world. Having underpinned the market for used devices for many years, HYLA Mobile has processed more than 43 million devices – helping to give money back to the consumer, generate revenue for operators, and prevent tons of e-waste.
Although the iPhone 8 launch may not have been all that it was expected to be, valuable lessons have been learned. If there is one thing we have learned from the iPhone 8 launch, it’s that more education is needed on the importance of trade-in programs. A wider promotion of trade-in services is also needed.
By highlighting the net worth of older devices to consumers, operators may find that fewer smartphones are confined to the back of a drawer for the foreseeable future. The promotion of these programs will see the true value of older models unleashed, delivering lucrative revenues, driving customer acquisition, and strengthening retention for the operator while putting a shiny new device in the hands of the user at a more affordable price. It’s a win-win situation! So, here’s hoping 2018 will be the year of the device trade-in.