Your Love of Your Old Smartphone Is a Problem for Apple and Samsung
The smartphone industry has a culprit to blame for slumping sales: Its old devices remain too popular.
Flashy phones of yesteryear, particularly Apple Inc.’s AAPL +0.41% iPhones and Samsung Electronics Co.’s Galaxy S handsets, are getting refurbished, and U.S. consumers are snapping them up. Many shoppers are balking at price tags for new phones pushing $1,000, and improvements on latest launches in many cases haven’t impressed.
As more people hold on to devices longer, new smartphone shipments plunged to historic lows at the end of 2017.
“Smartphones now resemble the car industry very closely,” said Sean Cleland, director of mobile at B-Stock Solutions Inc., the world’s largest platform for trade-in and overstock phones, based in Redwood City, Calif. “I still want to drive a Mercedes, but I’ll wait a couple of years to buy the older model. Same mentality.”
Another trend borrowed from the car industry that has helped consumers get around sticker shock: leasing. Instead of buying new phones, Sprint Corp. and T-Mobile US Inc.allow subscribers to effectively lease them, allowing them to trade up for the latest device. That option, though, hasn’t yet gone mainstream.
Refurbished phones represent the fastest-growing segment of the global smartphone industry, accounting for nearly one out of every 10 devices sold, according to Counterpoint Technology Market Research, which tracks device sales. Overall smartphone shipments hit 1.6 billion last year, Counterpoint says.
These older phones, which can sell for several hundred dollars, sap some of the demand for brand-new devices, which deliver the biggest profits. A premium handset today is likely to have three, if not four, different owners before it eventually gets tossed, according to industry executives and re-sellers.
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