Hand-me-down iPhones good for both carriers and Apple, study finds

Posted:
in iPhone edited January 2014


iPhones entering a growing "secondary market" from upgrading owners are allowing carriers to increase subscribership without paying subsidies as Apple gains new initiates to its iOS ecosystem.



A study released on Tuesday by Consumer Intelligence Research Partners (CIRP) found that the secondary mobile phone market, or used handsets that find new life with a second owner, has blossomed since the launch of the iPhone 4S in October 2011 and could be a source of found income for both telecoms and Apple, reports All Things D.



The study reveals that old iPhones often see new life as an economical way of entrance into the Apple ecosystem and helps to explain some of the incongruities seen between the number of carrier activations and handset sales data.



CIRP notes that 53 percent of new iPhone owners introduced their old handset to the secondary market, with a majority 49 percent being older iterations of Apple's popular mobile smartphone, followed by Blackberry with 21 percent and Android with 15 percent. Remaining handsets entering the secondary market were specified as "other" and constituted another 15 percent.



“IPhones also had the advantage of having a useful second life as iPod touch substitutes, which made their used value a little clearer from the start," said CIRP co-founder Mike Levin. "As a GSM phone, AT&T iPhones also could be [unlocked] for use on other GSM networks, so there was an early secondary market for iPhones on other carriers — though this was, of course, limited to more savvy and aggressive technology consumers.”





Source: CIRP







Of the surveyed new phone buyers who gave their old iPhone to another person, 87 percent said they expected the recipient to actiate the smartphone on a wireless network.



CIRP estimates that 11 percent of iPhone activations in the test period were previously-used handsets, meaning that carriers gained new iPhone subscribers without having to pay subsidies to Apple. The firm guesses that AT&T and Verizon saved between $400 million and $800 million in subsidy costs, or about $400 every secondary market iPhone activated. Analysts estimate that iPhone sales for the first fiscal quarter range from 25 million to 36 million units.



While the economic boosts from the burgeoning secondary market are somewhat quantifiable for mobile carriers, Apple's gains are more subjective.



“We think the secondary market is both detrimental and beneficial to Apple,” Levin said. “It hurts Apple because it creates competition for new iPhones, which we see in the relatively modest sales of reduced-price iPhone 4 and free iPhone 3G units. But it also benefits the company because used iPhone customers aspire to own the newest and best iPhone, so they are likely future new phone customers. In fact, they are likely new entrants to the Apple ecosystem, who otherwise would not have found a way in.”



New secondary market iPhone users are also potentially new iTunes users who will make music, video and app purchases, and may be candidates to buy existing or future Apple devices once integrated into the company's ecosystem.



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Comments

  • solipsismxsolipsismx Posts: 19,566member
    Apple is so stupid for making their devices so desirable and well made that they can be used years later. If only they were smarter like other vendors.
  • bagmanbagman Posts: 349member
    They need another category - thrown away or scrapped - which would show how Apple products are seldom merely discarded, and keep their value well beyond any android or blackberry product. How many competitors' products are sitting in the back of drawers among discarded electronic junk?



    I have sold my iphones (sold 3 over the last two years) for$280, $330, and $360. Anyone want to guess what the "latest" one-year-old android or blackberry would sell for?
  • solipsismxsolipsismx Posts: 19,566member
    Quote:
    Originally Posted by Bagman View Post


    Anyone want to guess what the "latest" one-year-old android or blackberry would sell for?



    There are several sites that buy back old CE we could check we could compare to how much they pay for iPhones.
  • sflocalsflocal Posts: 3,455member
    Quote:
    Originally Posted by SolipsismX View Post


    Apple is so stupid for making their devices so desirable and well made that they can be used years later. If only they were smarter like other vendors.



    I find it funny that Android phones are less likely to be given as a gift compared to a blackberry or "Other". What does that say about P.O.S Android phones?



    I'll wait for an Android shill to spin it as "Android phones are so valuable, that no one wants to part with theirs."... </sarcasm>
  • digitalclipsdigitalclips Posts: 15,308member
    Quote:
    Originally Posted by SolipsismX View Post


    Apple is so stupid for making their devices so desirable and well made that they can be used years later. If only they were smarter like other vendors.



    It is amazing really, for years built in obsolescence was seen as the only way to make money in hardware and this upstart Apple comes along with this wacky new paradigm; make things well that people pass on and actually want another newer one ... truly original thinking. Cool thing too is this idea is a bit harder to copy!
  • absolutedesignzabsolutedesignz Posts: 1,930member
    Quote:
    Originally Posted by digitalclips View Post


    It is amazing really, for years built in obsolescence was seen as the only way to make money in hardware and this upstart Apple comes along with this wacky new paradigm; make things well that people pass on and actually want another newer one ... truly original thinking. Cool thing too is this idea is a bit harder to copy!



    I wouldn't call it original thinking but definitely original (to this day) in the mobile arena.



    Like I always say, other OEMs and carriers are stuck on an old mindset...unaware that Apple changed more than just smartphoning, they changed the entire paradigm of the hardware AND the software.
  • dickprinterdickprinter Posts: 1,060member
    Quote:
    Originally Posted by AbsoluteDesignz View Post


    I wouldn't call it original thinking but definitely original (to this day) in the mobile arena.



    Like I always say, other OEMs and carriers are stuck on an old mindset...unaware that Apple changed more than just smartphoning, they changed the entire paradigm of the hardware AND the software.



    Not original thinking, if you ask me. Between the HW & SW, so much value is built into all of Apple's products that they have always had a tremendous after-life resale market. Their stuff is just that good. I challenge anyone to come up with any comparable CE/computer device against one of Apple's in an after-life resale scenario....laptop, desktop, tablet, anything.



    I was just about to sell my 8 year old PowerBook G4 for $300 until I spilled water in the keyboard and fried the sucker.



    TIP: Never walk upstairs with an open laptop in one hand and a cup of water in the other....in the dark. I miscounted steps as I climbed while reading the screen and misjudged the last step. A big dollop of water sloshed from the cup to the keyboard. What an idiot. Multitasking at its dumbest.
  • rot'napplerot'napple Posts: 1,839member
    Quote:
    Originally Posted by SolipsismX View Post


    There are several sites that buy back old CE we could check we could compare to how much they pay for iPhones.



    I just went to Gazelle.com



    Got a qoute of $104.00 for iPhone 3GS 32 GB



    Got a GOOSE EGG for a Droid A855 and during the description I gave the Android the best of everything... ie no water damage, least amount of dents, dings and scratches, all accessories available and is in good working condition... What's it worth? According to Gazelle...



    "Unfortunately, we can't offer you any money for this item



    Even though we can't pay you, we'd still like to help you recycle it responsibly. It's easy. Just click the 'recycle' button to add it to your box. As long as something else in your box has value, we'll still pay for shipping."



    So tried Samsung Galaxy S 4G SGH-T959V... $60.00 Maybe one can do better on Ebay?!



    Checked iPhone 4 32GB ATT Flawless = $200.00, Good = $173.00 and get this BROKEN (does not power on or broken LCD Screen or Broken, Cracked Missing Parts, ie ringer switch, charging ports etc.) = $65.00 take that Samsung!



    http://www.gazelle.com/catalog?keywords=iPhone





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  • jeffdmjeffdm Posts: 12,933member
    Quote:
    Originally Posted by AppleInsider View Post


    While the economic boosts from the burgeoning secondary market are somewhat quantifiable for mobile carriers, Apple's gains are more subjective.



    ?We think the secondary market is both detrimental and beneficial to Apple,? Levin said. ?It hurts Apple because it creates competition for new iPhones, which we see in the relatively modest sales of reduced-price iPhone 4 and free iPhone 3G units. But it also benefits the company because used iPhone customers aspire to own the newest and best iPhone, so they are likely future new phone customers. In fact, they are likely new entrants to the Apple ecosystem, who otherwise would not have found a way in.?



    New secondary market iPhone users are also potentially new iTunes users who will make music, video and app purchases, and may be candidates to buy existing or future Apple devices once integrated into the company's ecosystem.



    If the old phone was sold rather than handed down, Apple can also benefit from the resale value of the old phone being put toward a higher tier new phone.
  • jason98jason98 Posts: 700member
    Gave 3GS to my teenage daughter and put her on AT&T prepaid plan for $25 per month (unlimited text but no web). My iPhone-4 will end up in the same hands once Apple releases LTE/4"+ device.
  • solipsismxsolipsismx Posts: 19,566member
    Quote:
    Originally Posted by Rot'nApple View Post


    I just went to Gazelle.com



    Got a qoute of $104.00 for iPhone 3GS 32 GB



    Got a GOOSE EGG for a Droid A855 and during the description I gave the Android the best of everything... ie no water damage, least amount of dents, dings and scratches, all accessories available and is in good working condition... What's it worth? According to Gazelle...



    "Unfortunately, we can't offer you any money for this item



    Even though we can't pay you, we'd still like to help you recycle it responsibly. It's easy. Just click the 'recycle' button to add it to your box. As long as something else in your box has value, we'll still pay for shipping."



    So tried Samsung Galaxy S 4G SGH-T959V... $60.00 Maybe one can do better on Ebay?!



    Checked iPhone 4 32GB ATT Flawless = $200.00, Good = $173.00 and get this BROKEN (does not power on or broken LCD Screen or Broken, Cracked Missing Parts, ie ringer switch, charging ports etc.) = $65.00 take that Samsung!



    http://www.gazelle.com/catalog?keywords=iPhone



    I was only able to find one phone that was higher than the 16GB iPhone 4S's $297 sale value with everything working and intact. The Samsung Galaxy S II Skyrocket SGH-I727 on AT&T with the same capacity under the same conditions is $298.



    Note that they list 23 models for Galaxy and 4 different Galaxy S II models, yet all fall well under the iPhone except the AT&T model that came out scarcely 2 months prior. I'm guessing that AT&T clearly adds to the resale value yet I thought everyone was going to leave AT&T once Verizon was selling the iPhone.



    PS: Another interesting point is that the 16GB iPhone 4S's no commitment price is $100 more than the Galaxy S II. Now, both are sold at the same price on contract so that is actually a win for the Galaxy S II as it means it's resale value is closer to the original price than the iPhone's. I didn't account for how prices drop from month to month which could be the reason this model on AT&T is higher the ones on the other US carriers which released theres 1 to 2 months ago. But that's really a fringe case to sell such a new phone; the way you did it with older models makes a lot more since for the average user who can now upgrade to a newer device from an on older one.
  • bageljoeybageljoey Posts: 1,719member
    Quote:
    Originally Posted by Dickprinter View Post


    Not original thinking, if you ask me. Between the HW & SW, so much value is built into all of Apple's products that they have always had a tremendous after-life resale market. Their stuff is just that good. I challenge anyone to come up with any comparable CE/computer device against one of Apple's in an after-life resale scenario....laptop, desktop, tablet, anything.




    I have to agree--this longevity concept is not new to Apple, though it may be new to mobile handsets...

    My PowerBook 160 was upgrading to the latest OS for 6-7 years and worked fine for years after. I may not have spent as much on Apple products but it helped me sell 5-10 Macs to others even in Apple's dark days...
  • bregaladbregalad Posts: 816member
    The carriers love it when users activate pre-owned phones. They charge the same amount for a voice/data plan on an old phone as they do for one that contains a huge subsidy. They all do it so you can't threaten to go to the competition when they won't offer you a deal. It's as big a scam as their charges for text messaging, but there just doesn't seem to be any backlash.



    Unless you're going to demote your smart phone to a pre-paid "dumb" phone there's just no point activating an old phone when you could get a brand new one for almost the same total cost.
  • f1ferrarif1ferrari Posts: 223member
    My wife and I gave our 3G iPhones to our niece and nephew for Christmas, as we had upgraded to 4S models. They aren't even using them as phones, just iPods, and they are never without them. They have since asked for iTunes gift cards for their birthdays, so they can buy apps and music.
  • splash-reversesplash-reverse Posts: 648member
    Quote:
    Originally Posted by SolipsismX View Post


    Apple is so stupid for making their devices so desirable and well made that they can be used years later. If only they were smarter like other vendors.



    Unless you're being sarcastic, it is not stupid at all. It is all about retaining customer base. That include third party manufacturers, service providers and publishers on top of the actual customer (device owner). This is not something thought of beforehand but rather a by-product of Apple from its early days (the era at that time in term of how computer is used). Over time, it got honed down almost indepedently of Apple's effort to the point they are now. That's why competitors is still at lost. Desirability meet reputation.
  • chris_cachris_ca Posts: 2,517member
    Quote:
    Originally Posted by Bagman View Post


    They need another category - thrown away or scrapped - which would show how Apple products are seldom merely discarded



    Okay, so Apple products are not trashed.

    Quote:

    and keep their value well beyond any android or blackberry product. How many competitors' products are sitting in the back of drawers among discarded electronic junk



    So Android and Blackberry products are not trashed either?

    Then they are sitting in the back of a drawer along with the old Apple products that are not sold or gifted to trashed.. .
  • digitalclipsdigitalclips Posts: 15,308member
    Quote:
    Originally Posted by Splash-reverse View Post


    Unless you're being sarcastic, it is not stupid at all. It is all about retaining customer base. That include third party manufacturers, service providers and publishers on top of the actual customer (device owner). This is not something thought of beforehand but rather a by-product of Apple from its early days (the era at that time in term of how computer is used). Over time, it got honed down almost indepedently of Apple's effort to the point they are now. That's why competitors is still at lost. Desirability meet reputation.



    Mmmmm I think you got it in the first few words...
  • digitalclipsdigitalclips Posts: 15,308member
    Quote:
    Originally Posted by F1Ferrari View Post


    My wife and I gave our 3G iPhones to our niece and nephew for Christmas, as we had upgraded to 4S models. They aren't even using them as phones, just iPods, and they are never without them. They have since asked for iTunes gift cards for their birthdays, so they can buy apps and music.



    We do the same. Old iPhones make great iPods for kids.
  • tyancytyancy Posts: 64member
    Learned my lesson re SIM cards. The iPhone 4 uses a smaller sim than my old phone. When I upgraded, the geek yanked my old sim and, for no good reason, folded it in half and tossed it. If you are ever in this position and want to turn an old iPhone into an iTouch, restore it to factory settings, borrow a sim from a friend, pop it in the old iPhone, plug it in and launch iTunes. Follow the prompt and within a few seconds it is ready to go. Remove the borrowed sim and you are done.
  • alonso perezalonso perez Posts: 385member
    It's easy for existing users who want to upgrade to do so, because they can recover a good part of the cost by selling the previous phone.



    It also means more revenue from more devices using the app store.



    It also means selling phones to guys like me who hate artificial obsolescence. I am only on my second iPhone, and that's just because the first one was stolen!
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