Consumers are buying fewer new devices, instead turning to used ones, fueling the secondary market to a predicted market value of $65 billion by 2024.
Analytics firm IDC predicts a compound annual growth rate of 11.2% in the refurbished smartphone market by 2024, which will push the worldwide market for second-hand devices up to $65 billion in the same timeframe. From 2019 to 2020 the market saw a 9.2% jump as more people turn away from buying the latest and greatest devices, instead opting for a previous generation device that's cheaper while still offering all but the newest features.
"In contrast to the recent declines in the new smartphone market, as well as the forecast for minimal growth in new shipments over the next few years, the used market for smartphones shows no signs of slowing down across all parts of the globe," said Anthony Scarsella, research manager with IDC. Scarsella added that refurbished devices give vendors an opportunity to grow their brand as well as their own particular ecosystem of apps and services.
IDC classifies refurbished devices as those returned to a drop point or traded in and re-sold, which eliminates hand-me-down devices passed between friends and family.
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Premium flagship devices, IDC said, continue to rely heavily on trade-ins to offset rising device prices. Telecom companies and OEMs both offer their own deals, with the ultimate result being that more devices are being handed over for refurbishment instead of languishing in desk drawers or boxes of old tech.
TechRepublic sister site CNET echoed the possible consumer motivation behind IDC's report when it said "we're just not that into paying $1,000 for a phone anymore" in late 2019. Citing sales from the year it was written, CNET said new iPhone sales had dropped 13% in a year, and while Samsung showed growth in its overall sales, it had a drop in revenue thanks to more users buying cheaper A series devices rather than flagships.
"In the US, consumers now upgrade to a new model about every three years instead of every two. At the same time, software updates make old phones feel new, hardware designs aren't changing much from year to year, and less expensive devices are getting features previously found only in pricey flagship phones," CNET's Shara Tibken said.
Gartner's data from 2020 backs up IDC and CNET, too: It found a huge drop (20.2%) in new smartphone sales in the first quarter of 2020, and a corresponding 24% increase in refurbished sales during the same period.
COVID-19 throws a wrench in the works of finding a definite reason for the decline in new phone purchases: IDC said that overall smartphone sales were down 6.4% in 2020 due to the pandemic. It also found that the used device market grew by 9.2% from 2019 to 2020, indicating that, COVID-19 or not, new devices just aren't attracting consumers like they used to.
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