Smartphones

‘New technology will not necessarily replace old technology, but it will date it’ Steve Jobs

As consumers, we are compelled to possess the latest technology trends and innovations. This compulsion is rendering today’s technology as yesterday’s at an unprecedented rate, giving Steve Jobs’ observation more relevance than ever before. Such progression is no better exemplified than in the market for smartphones; as the market grows and evolves, new devices are released quickly dating older versions. With 1bn smartphone upgrades in 2015, what is the fate of used devices?

Along with more than 40% of smartphone users, according to Mobile Consumer Survey 2015, I have banished my old smartphones to a drawer, cast-off for new, improved versions. As technology moves on, they’re pushed further to the back and remain untouched. Companies are exploiting this desire to keep up with new technology to its fullest potential, with initiatives now facilitating smartphone upgrades every 12 months. With the annual replacement of smartphones, the trend to recycle them is increasingly growing, estimated at 50 percent year-on-year growth in units by TMT Predictions 2016, creating a previously untapped market. According to TMT Predictions 2016, second-hand smartphones will generate $17 billion for their owners, as approximately 120 million used phones will be sold or traded-in at an average value of $140 per device.

However, despite the opportunity for consumers to capitalise on the value of their old smartphones there are a number of reasons that could explain why around half of consumers hold on to them: concerns about data removal, lack of ease selling them, and being unaware of what their worth is.

One way in which these problems are being solved is by the increasing use of mobile price comparison websites (PCW), which guide consumers through the process of trading in used smartphones. According to Mobile Consumer Survey 2015 there are more than 50 registered mobile recycling companies, a number expected to grow with the market. The rise of PCWs has been monumental, as they allow consumers to filter and compare products based on price, feature, and other criteria. According to ‘Insurance Disrupted, two-thirds of motor insurance customers in the UK use PCWs, a trend which is expected to span across and commoditise some of Europe’s largest markets. One such market is used smartphones and, as such, we would expect the mobile recycling website market to increase globally.

For the consumer, the benefits of PCWs are widely acknowledged:

  • They allow consumers to make decisions in minutes that would otherwise take hours
  • They present what is often complex information in an accessible way
  • They deliver valuable outcomes such as identifying the right product and saving money

PCWs tackle the main concerns consumers have around recycling smartphones by creating clear channels for customers to sell their smartphones, guaranteeing data is properly deleted and offering transparency around their worth. As the value of used smartphones becomes less opaque, people are able to gauge the worth of their smartphones and demand the best market price in exchange, in some cases receiving payment the very same day.

For the smartphone vendors, the use of PCWs may mean prices of used devices can be better regulated, as opposed to those sold on websites such as EBay or Gumtree, and therefore, their market value can be better maintained. TMT Predictions 2016 suggests one of the key benefits of the second-hand market for vendors is that encouraging the annual replacement cycle may increase annual sales, a process which can be supported by PCWs. However, for companies acquiring second-hand phones, Mobile Consumer Survey 2015 anticipates it is likely they will have to compete harder to acquire used smartphones as the market becomes more populated and visibility to consumers increases.

What will happen to these 120 million recycled mobiles? Though it is at the discretion of the company, many endeavour to dispose of the smartphones in an ethically and environmentally friendly way. Firstly, this could mean sending them to emerging markets, such as Africa and Asia, which could lead to a long-term advantage for smartphones vendors by increasing brand exposure, familiarity and loyalty. Secondly, since many mobile devices thrown away end up in landfills, reselling mobile phones can prevent harmful waste, as the phones can be recycled into raw materials again.

As technology dates, we must seek new opportunities to recycle it in the most economically, ethically and environmentally friendly way. PCWs provide a clear means of facilitating this and we’re likely to be seeing even more of them in 2016. 

Disclaimer: WiThink is written from a personal perspective. All views and opinions are those of the author.

Alexa Nash-3

Alexa Nash – Analyst 

Alexa is a first year Analyst in Deloitte’s Technology Strategy & Architecture practice. She currently sits in Technology Futures working specifically with Deloitte’s Technology Alliances to develop and deliver innovative products and services. Alexa has a keen interest in technology trends and how they can impact and add value to those clients we work with.

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