At the start of 2019, the industry saw OEMs such as Apple attribute declines in revenue and smartphone sales to heating tensions with China, as well as to the broader economic slowdown. Samsung also forecasted a drop-in profits due to declining mobile sales in China and because of “intensified competition”. But it seems that the slowdown in global smartphone sales cannot be solely blamed on China – demand doesn’t seem to be strong in developed markets, either.
So, if it’s not China, what is it that’s causing a worldwide slowdown in smartphone sales? It seems that consumers holding onto their devices for longer is having an impact.
The global smartphone market is in a state of flux. With smartphones seen as a commodity, and newer models boasting only incremental improvements (no doubt in preparation for the arrival of 5G), consumers aren’t parting ways with their older mobile devices as often as they have done previously. In fact, our own research has found that the average age of a smartphone at trade-in just under three years.
So, what can operators do to encourage their customers to upgrade their mobile devices?
Taking note from other markets
As numbers in the global market continue to decline, the same can’t be said for the pre-owned device market. In fact, this market continues to thrive, and according to IDC, it is expected to reach $52B by 2022.
The reason the pre-owned device market continues to go from strength to strength is because there are many applications for these devices – whether that’s using pre-owned devices for insurance purposes, giving these devices a second life in developing countries or providing certified pre-owned device options to consumers here in the U.S. The market demand is truly global.
So, with the pre-owned device market thriving, and the global smartphone market faltering, operators need to do more to incentivise consumers to upgrade to new devices. Many consumers are likely to be holding off on upgrading due to the promise of 5G – but with 5G networks still in development, consumers will be waiting time before they can get full use from a 5G device. Operators therefore have a role to play in educating consumers, promoting their trade-in offerings and encouraging upgrades even before 5G becomes mainstream.
Last year, our own data found that trade-in programs returned over $2.2bn to US consumers. Trade-in programs are no doubt growing in popularity, with consumers, carriers, retailers and OEMs realizing the latent value in devices. But more needs to be done. Today, only a small proportion of consumers upgrade their devices – which means operators, OEMs and retailers are missing out on huge revenue opportunities.
What operators shouldn’t forget, or fail to promote, is that trade-in programs follow a model where everyone wins. The customers get credit for a device they no longer want or need, while the operator gets to retain the customers for longer. And most importantly, by trading in a device, customers and operators are able to help the environment by preventing e-waste going to landfills.
The power of trade-ins
Trade-in programs are a great opportunity for operators to enhance their customer relationships by engaging with their customers and offering an enticing deal. They’re also a great way for operators to promote additional products and services such as accessories and device insurance. These programs are an important tool for operators to retain customers, improve their relationships, and importantly, increase revenues.