User satisfaction, refurbished device prevalence may hurt future iPhone sales

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in iPhone
Many users of high-end smartphones are keeping older models and opting for refurbished phones over expensive new ones, which has the potential to draw down Apple and Samsung's hardware sales volumes in the future, if trends continue.




According to a Wall Street Journal analysis published Wednesday, more consumers are buying refurbished versions of previous years' models or keeping old phones for longer, rather than opting for more expensive new models. As a result, premium smartphones such as the iPhone and Samsung Galaxy S are now likely to have three or four owners over the course of their life.

While refurbished smartphones have long been popular in emerging markets, they're gaining resonance in North America. Auction website B-Stock Solutions told the Wall Street Journal that the U.S. share of its smartphone auctions has grown to 93 percent, from around 50 percent five years ago.

The piece also cites data suggesting that nearly 10 percent of smartphones sold worldwide are now refurbished. If accurate, used smartphone sales are the fastest-growing segment of the industry.

Other factors weighing in on purchasers' decision include the near-extinction of two-year carrier subsidized contracts, as well as general improvements in the phones themselves. According to the report, the average upgrade cycle has increased by eight months since 2013, to 31 months, and is expected to reach 33 months next year, potentially impacting any "super cycle" for the iPhone that has been predicted since early 2017.

Stock analysts predicted such a super cycle of massive sales volume throughout last year, based on a confluence of factors including the prevalence of the aging iPhone 6 -- although some of them rethought or redefined those predictions after Apple announced its earnings on Feb. 1.

Counterpoint's Neil Shah wrote in a Feb. 19 note that an iPhone "revenue super cycle" remains possible in 2018, thanks to the company's strong market share, the product's continued stickiness and the willingness of some consumers to continue to pay a premium for new iPhones.

Even though Apple and Samsung may not benefit directly from the sale of refurbished or used phones, they are still a source of considerable revenue through app downloads, streaming subscriptions and other attached revenue streams. As part of that, Apple's services revenue, which includes Apple Music, and the App Stores have seen an increase to $11.5 billion in the fourth quarter.
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Comments

  • Reply 1 of 46
    BebeBebe Posts: 114member
    Many users of high-end smartphones are keeping older models and opting for refurbished phones over expensive new ones, which has the potential to draw down Apple and Samsung's hardware sales volumes in the future, if trends continue.

    Duh!  There goes another Wall Street's prediction.  


    racerhomie3watto_cobra
  • Reply 2 of 46
    lkrupplkrupp Posts: 6,514member
    Yeah, and the WSJ also says the shortage of iPhone replacement batteries indicates more people are opting to replace the battery than buy a new iPhone. All harbingers of ultimate doom for Apple I suppose. But AAPL is near its record high today so there’s that. Meanwhile the new FED chairman says consumer confidence is at an all time high, wages are rising, and spending is up. I’m just say’in.
    magman1979LukeCagewatto_cobra
  • Reply 3 of 46
    this only makes sense.  As the phones become more reliable and the advances between iterations gets less, there is less reason to get a new one.  Nothing wrong with the old one.  Up until now there were huge changes for almost every non "S" version of the iPhone.  From better antennas to better screen, better camera, better security via touch ID, better durability due to fewer moving parts, etc.  Screen resolution can't get THAT much better, durability is high, 5G is around the corner but other than that the networking capabilities aren't leaps and bounds better.  There just hasn't been that next round of "wow, I can't do day to day tasks without that".  AR is cool but in its infancy.  FaceID is cool, but a gimmick at this point.  I'm not knocking the X, it's cool but there is no incentive to move up.  That's why I'm still on my 6, it is still too good of a phone to toss.  

    Maybe Apple should embrace the tinfoil hat-wearers and put in some planned obsolescence  :fearful: 
    jahbladeavon b7watto_cobra
  • Reply 4 of 46
    I've been buying refurbished iPads for myself and others for several years now and I'm still using a refurbished iPhone 6S Plus with no plans to upgrade to the 7, 8, or X at this time. It's not because I can't afford them or don't love Apple - it's about price vs. benefit.
    jahbladeanton zuykovGeorgeBMac
  • Reply 5 of 46
    fallenjtfallenjt Posts: 3,930member
    I'll wait for WSJ to troll AAPL so I can jump back in. I made over $10k in the last 2 peaks and dips with AAPL in a few months: set buy at $160 and sell at $180.
    watto_cobra
  • Reply 6 of 46
    There's two sides to this story. Many want the latest and greatest no matter what. Replacing a battery isn't going to stop people from buying a new phone. In fact it might promote more trade-ins for the new phones coming out. 
    tmaywatto_cobra
  • Reply 7 of 46
    horvatic said:
    There's two sides to this story. Many want the latest and greatest no matter what. Replacing a battery isn't going to stop people from buying a new phone. In fact it might promote more trade-ins for the new phones coming out. 
    Agree.  And all these US carriers with NEXT like plans that allow easy upgrades will help boost new sales as well.  
    watto_cobra
  • Reply 8 of 46
    I hung onto my iPhone 6 until just a few weeks ago when I finally bought an X. Wonderful phone. Certainly the best that Apple has produced. However, I paid cash and won’t be upgrading again for several more years I suspect. Apple builds these devices to last so why would I want to upgrade it every year? The last time I updated an Apple device after just one year was when I upgraded to the iPad Pro 10.5 from my less than 1-year-old iPad Pro 9.7. I use my iPad much more than my phone and I felt justified for that reason.
    jahbladezroger73iCintoswatto_cobrammatz
  • Reply 9 of 46
    tmaytmay Posts: 3,242member
    The essential point is that these people are part of the ever increasing user base of Apple products and services, whether they make timely upgrades or not. Only a very small percentage ever leave Apple's ecosystem, and that is always dwarfed by Android OS, and Windows OS, users entering Apple's ecosystem.
    iCintoswatto_cobra
  • Reply 10 of 46
    brucemcbrucemc Posts: 1,466member
    airnerd said:
    this only makes sense.  As the phones become more reliable and the advances between iterations gets less, there is less reason to get a new one.  Nothing wrong with the old one.  Up until now there were huge changes for almost every non "S" version of the iPhone.  From better antennas to better screen, better camera, better security via touch ID, better durability due to fewer moving parts, etc.  Screen resolution can't get THAT much better, durability is high, 5G is around the corner but other than that the networking capabilities aren't leaps and bounds better.  There just hasn't been that next round of "wow, I can't do day to day tasks without that".  AR is cool but in its infancy.  FaceID is cool, but a gimmick at this point.  I'm not knocking the X, it's cool but there is no incentive to move up.  That's why I'm still on my 6, it is still too good of a phone to toss.  

    Maybe Apple should embrace the tinfoil hat-wearers and put in some planned obsolescence  :fearful: 
    I agree with most of your post, but the FaceID as gimmick comment seems odd.  From what I have read, and in speaking to X owners, it works quite well, and they find it better than TouchID overall.  It does exactly what it is supposed to do, well, and reliably.  Not sure how that makes it a gimmick.
    watto_cobrammatz
  • Reply 11 of 46
    macguimacgui Posts: 955member
    Many users of high-end smartphones are keeping older models and opting for refurbished phones over expensive new ones. . .
    I'm shocked, shocked, I tell you.
    watto_cobra
  • Reply 12 of 46
    brucemcbrucemc Posts: 1,466member
    I have never upgraded every year - in fact it has been every 3 years - even though I am an Apple enthusiast.  I just couldn't justify it to myself.  When I do upgrade though, you get a lot of enjoyment out of the cumulative features over those years.

    As for the story, I am sure Apple would sooner have high user satisfaction with the potential downside of slowing sales (or having to work harder to get that sale), rather than the alternative.
    tmayairnerdwatto_cobra
  • Reply 13 of 46
    Are the environmental considerations also (reducing mining, waste, etc.) worth consideration? How many refurb are buyers are those that would or could never buy the new product ? Does Apple excel at offering confidence in refurbished products, even offering Applecare and extended warranty 'as-new'...?
  • Reply 14 of 46
    My brother just got a new phone for his wife. They looked at the options and ended up replacing her iPhone 4S with a 7. Still a huge bump, but not newest. 

    My SE and my wife's 6 are going strong. Unless one gets smashed or otherwise won't do what ewe need, no reason to upgrade. 
  • Reply 15 of 46
    According to a Wall Street Journal analysis published Wednesday, more consumers are buying refurbished versions of previous years' models or keeping old phones for longer, rather than opting for more expensive new models.
    Yes, I'm one of those people. I currently have an iPhone 5s and will keep it as long as possible. When I replace it, I plan to buy an iPhone 6s or 7. The thrill of having the latest, greatest smart phone has worn thin with me, especially now that they are in the $800-1,000 neighborhood. I was a proud early adopter when I bought the original iPhone and even 3s, but now I would feel more like a sucker if I were to pay $800-1,000 every year or two for a new phone. 
    edited February 28 tokyojimuzroger73
  • Reply 16 of 46
    paxmanpaxman Posts: 4,588member
    This happened with Macs, too. As the devices become more powerful the need to upgrade decreases. My previous laptop was an aluminum MacBook. I maxed out the RAM and replaced the DVD drive and HD with SSD's over the years and only replaced it when it got showered in coffee and stopped working. Even doing basic Photoshop work was fine. I am currently on an iPhone 6s and even if I would love a better model it works just fine (battery notwithstanding). I love my hardware but I also love the idea of buying less. Of anything. 
     
  • Reply 17 of 46
    I made so much money in my Apple stocks, ive been upgrading every time new iphone, ipad, apple watch, apple TV comes out...got, airpods, homepod and really satisfied.
    i handed down my older units to my wife and kids....
    Count me out as refurbished buyer :-)))
    watto_cobra
  • Reply 18 of 46
    lkrupp said:
    Yeah, and the WSJ also says the shortage of iPhone replacement batteries indicates more people are opting to replace the battery than buy a new iPhone. All harbingers of ultimate doom for Apple I suppose. But AAPL is near its record high today so there’s that. Meanwhile the new FED chairman says consumer confidence is at an all time high, wages are rising, and spending is up. I’m just say’in.
    Most people who are replacing their batteries are hoping for a faster iPhone with a current OS. Too bad it won't be as fast as the original OS the iPhone came with. At some point many of those people are going to have to make a decision whether to continue using the device, or replace it. I think a good portion of them might buy a new or refurbished device. That would be good for Apple unless they decide that this was the last straw and go Android. 

    We will see later this year how it pans out. 
    GeorgeBMac
  • Reply 19 of 46
    Wall Street's analysts! Wall Street's analysts! They just wake up in the morning and ‘saw the light!’ Of course this would happen… But 3-5 years ago, Apple saw that and began the development of the new iPhone X platform.
  • Reply 20 of 46
    My wife and I have a good system going: We buy her a new iPhone every 2 years and I get her old one.  Right now, she's on a new 8 while I'm on her old 6S.  We get 4 years use out of each phone and I since I'm not a heavy user I barely notice the decrease in performance unless the battery starts to go south.  Not hard to see why the average upgrade cycle is increasing.
    watto_cobra
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