Refurbished smartphone market fastest growing segment in 2017: Counterpoint

Only 25 percent of pre-owned smartphones are sold back into the market.

  • Published: March 7, 2018 8:16 PM IST

While manufacturers the like of Samsung and Apple are introducing top-of-the-line smartphones, it is the refurbished versions of these handsets that were selling like hotcakes in the year gone by. In its latest Refurbished Smartphone tracker report, Counterpoint highlights that the global market for refurbished smartphones grew 13 percent year-on-year in 2017, close to 140 million units. In contrast, the global new smartphone market grew a meager 3 percent last year.

Refurbished smartphones or second-life smartphones are pre-owned that are repaired or rejuvenated for re-selling purposes. As the firm explains, only 25 percent of all pre-owned units are sold back into the market, and of these, only some are refurbished. There are many grades of refurbished devices that attract different price points depending on a variety of factors including quantity, specific model, color variant, storage, and so on.

The interesting trend highlights how the refurbished market is closing the gap with the new smartphone market. A research director, Tom Kang, highlighted, “With 13 percent growth, refurbished smartphones are now close to 10 percent of the total global smartphone market. The low growth of the new smartphone market in 2017 can be partially attributed to the growth of the refurb market. The slowdown in innovation has made two-year-old flagship smartphones comparable in design and features with the most recent mid-range phones. Therefore, the mid low-end market for new smartphones is being cannibalized by refurbished high-end phones, mostly Apple iPhones and, to a lesser extent, Samsung Galaxy smartphones.”

The stress on Apple and Samsung devices is evident given these two brands bring out some of the most expensive smartphones in any given year, and given the hefty prices, those who want to upgrade to the brand, often consider purchasing refurbished or pre-owned units, available at a relatively lesser cost. Last year, in its bid to invade the Indian smartphone market, Apple tried to convince the government to sell used iPhones in the country. However, that demand is yet to be addressed.

As the research notes, Apple and Samsung hold a combined three-fourths share of the refurbished market, with Apple leading with a significant margin. In terms of revenue, the two brands control over 80 percent of the total revenue in the refurbished smartphone market.

While it is an interesting trend to see refurbished and pre-owned smartphones gaining more control in the market, it also predicts the shrinking market for new devices in 2018. Another research director, Peter Richardson observed, “It’s a surprise to many that the fastest growing smartphone market in 2017 was not India or any other emerging market, but the refurb market. With refurb smartphones in play we think the market for new devices will slow further in 2018.”

The refurbished smartphone market recorded the highest volume in regions including the US and Europe, with the fastest growing markets in Africa, South East Asia, and India. Richardson said, “All have been seeing initiatives from the major operators (eg Verizon, Vodafone etc.), OEMs (eg Apple) and major distributors (eg Brightstar) who are adding full life-cycle services. The industry uses data analysis to predict future resale values of devices, which means consumers can be given a guaranteed buy-back value at various points during their ownership. This helps consumers to manage the high cost of the latest flagship smartphones – or at least to obtain a useful contribution to partially offset the cost of their next phone.”

From the brands’ perspective, a lot of manufacturers position these devices as ‘green’. What also contributes to the growth is that many believe the profit margin on a used device is higher than on a new device. The researchers estimate the trend of the refurbished smartphones will continue to grow.

  • Published Date: March 7, 2018 8:16 PM IST