Upgrades Fueling Second Hand Smartphone Sales Boom, Says Gartner

What proportion of smartphone owners upgrade just to get their hands on the latest, shiny new hardware? According to a new survey of U.S. and Germany consumers, by analyst Gartner, the figure is 60 per cent. The survey polled some 5,600 consumers in the two countries in June last year.

But while smartphone upgraders are helping to drive the upper end of the smartphone market, and doubtless putting money into Cupertino’s coffers (given Apple’s focus on the premium device segment), they are also having a secondary effect on the mobile market as a whole by increasing the number of second-hand devices in circulation.

Gartner is predicting the global market for refurbished phones that are sold to end users will grow to 120 million units by 2017, up from 56 million last year. It puts an equivalent wholesale revenue figure of around $14 billion on the size of the market in two years, vs $7 billion last year.

It found just a fraction (7 per cent) of upgraders’ old smartphones are sent to official recycling programs. The majority (64 per cent) get a new lease of life via the second hand market — with the largest portion (41 per cent) being traded in or sold privately, and around a quarter (23 per cent) handed down to others.

Bottom line: second hand, hand-me-down smartphones will be increasingly cannibalizing the market for new (in all likelihood mid-range) handsets — as high end used devices offer mid market buyers an attractive alternative that also meets their budget. Why buy a new but relatively uninteresting mid range handset when you can have a premium handset that’s maybe only a year or so old?

“This rise in smartphone reuse will impact not only the sales of new units, but also the revenue streams of all those involved in the smartphone supply chain,” notes analyst Meike Escherich in a statement. “Stakeholders that are already participating in take-back or trade-in programs need to have a strategy for turning used devices into a positive asset.

“Others — particularly high-end phone original equipment manufacturers — need to take a closer look at this market in order to evaluate the impact these second-hand devices will have on their market positions and revenue streams.”

Gartner is predicting the growing number of privately sold phones will also force increased competition in the take-back/trade-in market, and require refurbishers and comms services providers to up their game when it comes to marketing their programs and offering new incentives for phone owners to offload their old models.