While 2020 was a challenging year, it could have ended on a worse note for the mobile device ecosystem of carriers, OEMs, and retailers. The slowdown in retail sales in Q1 and Q2, began to improve in Q3, and according to research from Counterpoint, new smartphone sales rose 8% in 4Q over the previous quarter. And, because trade-ins and new phone sales are tightly intertwined, we saw similar trends when analyzing our Mobile Device Trade-In Data.
Consumers Are Getting Great Deals from Trade-Ins
2020 turned out to be a great year for customers to trade in their phones, especially in the fourth quarter. Overall, customers received $2.11 billion from trading in their phones in 2020. While on an annual basis it was 11% lower than in 2019, we saw a tremendous rally in the fourth quarter with a 38% increase over the previous quarter. To put in perspective how truly strong trade-in was this past quarter, we typically see about a 20% increase from third quarter to fourth quarter.
Our trade-in trends report for the fourth quarter showed trade-in values for devices were also robust in the fourth quarter. Customers received an average of $182.85 for their old iPhone and $108.85 for Android smartphones– the highest average values to date for a given quarter from our trends analysis.
Device Age Still Increasing
Throughout 2020, we saw that the age of devices at trade-in were gradually increasing until Q4, when there was a slight dip as we tend to see at the end of each year due to holiday promotions as a higher number of customers were upgrading to new devices.
What’s noteworthy is the cumulative impact of this gradual change in the average age of traded in phones in recent years. When we first started reporting this metric in Q3 2016, the average age of a mobile device was 2.36 years. In the fourth quarter of last year, it had risen to 3.17 years.
A Turning Point in Phone Generations
According to our mobile device trade-in data, starting in Q1 of 2019, there have been seven straight quarters of the iPhone 7 as the most traded phone. It wasn’t until Q4 2020 that the iPhone 7 was replaced by its successor, the iPhone 8, as the most-traded device. The iPhone 8 was released in 2017 and with the average device age at trade-in of about 3 years, it makes sense that we would now be seeing more iPhone 8’s traded in. What also comes into play are the strong trade-in promotions in the fourth quarter for the newly launched iPhone 12 series which required a trade of an iPhone 8 or newer. Once again, we see how trade-in influences customer behavior.
It’s No Longer Just About Mobile Devices
Last year, we saw more trade-in promotions around wearables than we have in the past. Our 2020 Mobile Device Trade-in Trends shows that the average trade-in value for an Apple Watch Series 5 was $202.49. For those buying a new Series 6 watch at retail for $699, offsetting their cost by just over $200 is significant. Remarkably, even a Series 1 watch held an average trade-in value of $22.
We expect the strong rebound we saw in the fourth quarter to continue into 2021 fueled by consumers’ appetite to upgrade to 5G to take advantage of faster speeds and increased bandwidth. Carriers, retailers, and OEMs should continue to promote trade-in to attract new customers, maintain loyalty and try to offset the financial impact of the pandemic that many consumers are experiencing.
For more details on our trade-in trends in 2020, download our infographic today!