Throwing Money In The Drawer

Posted by Michael Finucane on

56 million second-hand phones were sold in 2014 globally … five years later and the figure is 150 million; by 2020, we expect the figure to have gone up to 160 million!  People are waking up to the fact that the tech that they spent serious money on and have become bored with, still has value … instead of throwing it in the drawer, giving it to the kids or dropping it into a recycling bin, they are recouping some of their investment via trade in.

This growth in the pre-owned phone market coincides with another interesting swing … people are keeping hold of their phones for longer, before they upgrade. From 23 months in 2014, to almost 34 months now.

And why are they keeping hold of their phones for longer?  Is it just a co-incidence that while the used phone market has grown by almost 100 million in five years, the majority of users are also holding onto their phones for an additional ten months?

It seems obvious to us here at Smartspot, that the rapid rise of the second hand market seems to be directly correlated to the motives that drive smartphone owners to hold onto their tech.

 

The Market is Maturing
Firstly, the issue of cost has to be considered.  The established benchmark price for premium new releases seems to be accepted as €1,000 plus…an increase of over 50% in the past three years, according to a CNBC news story of May 2019. This kind of huge inflation has to have an affect on the decision of users to hold onto their phones; although interesting, it has coincided with a decrease in users signing up for long term contracts, with a phone included.  Consumers seem to be recognising that they are paying a lot of money for their phones and that it an asset.

Previously, with most people on fixed terms contracts, the replacement cycle was pretty predictable.  People upgraded their phones every 12, 18 or 24 months, with no recognition of the investment they had made … we all thought we had ‘free phones’! And there was an element of peer pressure in the relationship we had with our service providers, we were constantly ‘keeping up’ with the latest release.

Now, however, faced with the relalisation that we have actually paid over €1,000, we are all more inclined to get a sense of value out of our money, or to actually look for cheaper alternatives – such as a pre-owned model. The consumer is more active and is looking for choice and flexibility – shorter contracts and options about exactly what phone you want.

This maturing market is also influenced by the improvement in technology.  Handsets are full of more and more features … you practically need a degree in Computer Science to be able to be exploit all its capabilities. However, what we actually need our phones to do hasn’t changed that much. Being robust and reliable, with good support and cost effective repairs are what consumers want.  Not needing to constantly unlearn and learn again how to do something, encourages longevity.

And this robustness and reliability, with good support and cost effective repairs is exactly what feeds the second, third and even fourth hand market!

The maturing of the market isn’t only about contracts, price and terms though.  The purchasers of new technology have grown up and have different needs.  Whereas in 2011 we watched people queuing for days for the latest release from Apple or Samsung, now we have ‘innovation fatigue’.  There isn’t really anywhere for the manufacturers to go in terms of ‘big’ developments and actually consumers are getting fed up of having to re-learn how to use their phones again and the time and energy that this takes … not to mention the frustration when you ‘lose’ photographs, contacts or apps that you liked!

So, What Is The Future Of The Used Phone Market
Naturally development has slowed down.  Until they can get the phone to actually make the coffee and bring it to our desks, the ‘wow’ factor is limited! Most consumers are more knowledgeable, experienced and know what they need and are less inclined to rush out and spend a lot of money on each release because their ‘mates’ have it, 

By 2022, the used phone market is forecast to have exceed sales of $50bn. Reliability, functionality and value for money seem to be gaining traction as the purchasing motivations for both individuals and companies.

For all your used phone needs, give us a call on +353 46 205 2821 or email us at smarties@smartspot.ie


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