Gartner Says Worldwide Market for Refurbished Smartphones to Reach 120 Million Units by 2017

Rise in Smartphone Reuse Will Motivate Providers to Take a Closer Look at Second-Hand Market

STAMFORD, Conn., (PresseBox) - A survey of US and German consumers by Gartner, Inc. found that 60 per cent of consumers are replacing their smartphones because they are interested in additional functionality, or they "just want" a new device. Consequently, the worldwide market for refurbished phones that are sold to end users will grow to 120 million units by 2017, with an equivalent wholesale revenue of around $14 billion. This is up from 56 million units in 2014, with an equivalent wholesale revenue of $7 billion.

The survey, which was conducted in June 2014, surveyed more than 5,600 US and German consumers about their technology usage and attitudes in order to gain a better picture of how devices are used for work and leisure.

"With consumers in mature markets upgrading their smartphones every 18 to 20 months the inevitable question is what happens to the old device?" said Meike Escherich, principal research analyst at Gartner. "While only seven percent of smartphones end up in official recycling programmes, 64 per cent get a second lease of life with 23 per cent being handed down to other users and 41 percent being traded in or sold privately.

"This rise in smartphone reuse will impact not only the sales of new units, but also the revenue streams of all those involved in the smartphone supply chain," continued Ms Escherich. "Stakeholders that are already participating in take-back or trade-in programs need to have a strategy for turning used devices into a positive asset. Others - particularly high-end phone original equipment manufacturers - need to take a closer look at this market in order to evaluate the impact these second-hand devices will have on their market positions and revenue streams."

With nearly two-thirds of replaced smartphones being reused, continued demand for high-end used devices will increasingly impact primary-unit sales, and motivate phone providers to look into the second-hand market. In North America and Western Europe, the market for refurbished phones is forecast to be worth around $3 billion in 2015 and growing to $5 billion in 2017. Many users are attracted to used high-end devices that they would not have been able to purchase at the original selling price.

"The growing number of privately sold phones will stir up competition in the take-back market and drive communications services providers and refurbishers to engage in more aggressive marketing campaigns and new incentives," said Ms Escherich. "The survey shows that, in the US and Germany, 41 per cent of used smartphones find new owners via private sales or trade-ins. This trend applies to all levels of technology users, however, users who identify themselves as 'tech enthusiasts' in particular should be targeted to shift their behaviour away from private sales and toward trade-ins."

Tech enthusiasts generally are early adopters and trendsetters, and constitute around 25 per cent of the US sample. Fifty-three per cent of respondents in this category said they would replace their smartphones in the next 12 months, with 56 per cent claiming that their current phones were less than a year old. Nearly half said that their replacement phones would be driven by new features or functionalities that can be found only in the new devices.

"For hardware vendors, this group of self-proclaimed tech enthusiasts is of particular interest, because trade-ins provide their channel partners with hardware that can be reused for warranty replacements, and for extending the brand reach into user segments that can't afford these particular devices at the original purchase price," said Ms Escherich. "Perhaps most importantly, however, is that tech enthusiasts tend to show high brand loyalty, indicating a good probability for future purchases of the same brand - with the extra credit earned via trade-ins often used for upgrades on their new purchases."

Gartner UK Ltd

Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company. The company delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the valuable partner to clients in over 9,100 distinct enterprises worldwide. Through the resources of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, USA, and has 6,600 associates, including more than 1,500 research analysts and consultants, and clients in 85 countries. For more information, visit www.gartner.com.

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