The used smartphones market is forecast to grow faster than the overall smartphones market with the predictions saying the growth will be four to five times more.
Deloitte Global, in its 2016 Technology Media and Telecommunication (TMT) predictions report launched Tuesday says that in 2016 consumers will sell outright or trade in approximately 120 million used smartphones generating more than $17 billion for their owners.
“The value of sold or traded-in smartphones will likely be about twice that of wearables and 25 times the value of the virtual reality (VR) hardware market,” part of the report states.
The increase of used phones in the “black market” will undermine legitimate phone vendors as the consumer could prefer used phones over new ones hitting the market. Vendors of new gadgets like Huawei, Techno, and Samsung among others will face some challenges with the report noting that the smartphone market share increased to 7% in 2016 up from 5% and 4% in 2015 and 2014 respectively.
Deloitte predicts that “at least 10% of premium smartphones ($500 or higher) purchased new in 2016 will end up having three or more owners before being retired and will be used actively in 2020 or beyond.” It further estimates that on average the value of a smartphone device will be about $140, further making it possible for more people to acquire smart gadgets. There will be up to 50 percent increase in sales due to the low pricing.
More strategic means to sell or acquire a second-hand device
It is expected that the practice of selling smartphones could well accelerate through 2020 as both consumers and supplier increasingly embrace the idea of selling or acquiring second-hand smartphones.
With a well-organized second-hand market more consumers will opt to sell or trade in a smartphone device rather than giving it to a relative or using it as spare.
The report says: “the availability of a formal second-hand market could make their (vendors) devices more affordable to customers with smaller budgets, without having to create less profitable, budget variants of their devices.”
Deloitte notes that specialist companies may emerge which forecast trade-in values after one, two or more years of ownership, similar to what is observed in the automobile industry.
According to Deloitte, emerging markets will be net acquirers of second-hand smartphones and as such, the firm urges markets to explore the advantages of offering used and re-branded phones. Insurers are also urged to look at possibilities of coming up with products to cushion consumers who risk losing the devices.
Apart from insuring their smart gadgets, Deloitte also reminds consumers to ensure that they erase their data (installed in the phone) before selling on. Although professional buyers of used phones erase the data, private buyers would not do so.
The adoption of reselling used phones though a challenge for companies that deal with new phones is an answer to saving the environment from the menace of e-waste that ends up in landfills across the world.