Robust Market for Used iPhones Benefits Users, Carriers, and Apple

[MacRumors]

AllThingsD reports on new research from Consumer Intelligence Research Partners (CIRP) analyzing the impact of the secondary market for the iPhone, the portion of used iPhones that are resold or given away when users upgrade to the latest models. The survey looked at customers purchasing new iPhones beginning with the iPhone 4S launch last October, finding that 53% of those users had returned their old phones to the secondary market.

Of those old phones being put back onto the secondary market, the survey found that 49% were older iPhones, while 21% were BlackBerry smartphones and 15% were Android devices. Approximately two-thirds of those devices returned to the market were given away, with the remaining third having been sold.

Breakdown of old devices reentering secondary market following new iPhone purchases​

According to the survey, 87% of those who sold or gave away their old iPhones expected the recipients to activate them for use, which CIRP estimates as representing 11% of carrier activations since last October. That number represents a boon for carriers, who do not have to pay subsidies to Apple on the used devices.

The research firm believes that, for every used iPhone that carriers activate, they save around $400. In the fourth quarter of 2011 alone, CIRP figures that secondary-market activations saved AT&T and Verizon between $400 million and $800 million in subsidy costs.

And while the strong market for used iPhones may seem like a detriment to Apple given that those users may be purchasing a used device offering no revenue for Apple rather than a new one, CIRP suggests that those low-priced used handsets are a common way to introduce new users to the iPhone ecosystem. That introduction then sets the users up for future purchases of new iPhones and other Apple products.

"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."

Beyond future hardware sales, the used iPhone market also increases the user base and market for apps and other iTunes Store content, with the device's able to serve more good than if they had been discarded or forgotten in a drawer.

Article Link: Robust Market for Used iPhones Benefits Users, Carriers, and Apple

 

[*LTD*]

The high resale value of Apple gear has always been known. It says a great deal about the value proposition consumers recognize in Apple products, old and new.

The same can't exactly be said for the competition.

 

[Rudy69]

A used iPhone is still a very usable phone (looking at my old 3Gs that can still run the latest iOS version), while an old Android phone might not (hell even new Android phone some times don't run the latest OS...)

 

[dethmaShine]

I won't be any technical but this research has so many far reaching implications. I must say that this is the one of the most comprehensive and clever and insightful research in a while.

Great work.

 

[fabian9]

The research firm believes that, for every used iPhone that carriers activate, they save around $400. In the fourth quarter of 2011 alone, CIRP figures that secondary-market activations saved AT&T and Verizon between $400 million and $800 million in subsidy costs.

Do US carriers not make a difference between people who are getting an iPhone contract and already have the phone and those who join and buy the phone from them?

At least in the UK, if you have an unlocked iPhone and go to any carrier, you'll be able to get a much cheaper SIM only contract, as the carrier doesn't have to pay Apple for the phone.

Is this not the case in the states? Seems like a bit of a rip off to charge customers for a full price iPhone contract when the carrier doesn't end up having to pay Apple for anything?

 

[Mev75]

I gave my iPhone 3g away to someone who could not afford a new one - I got a voucher for 'one evening of babysitting' in return.

My iPhone 4 and original iPad were already handed over to my family. Luckily we have two Kids, so the purchase of the iPad 3 is not in question and my wife will inherit my iPad2.

But I am still looking for a good reason to replace my mid 2009 13" MBP - but I can't find a valid one.

 

[tigress666]

Do US carriers not make a difference between people who are getting an iPhone contract and already have the phone and those who join and buy the phone from them?

At least in the UK, if you have an unlocked iPhone and go to any carrier, you'll be able to get a much cheaper SIM only contract, as the carrier doesn't have to pay Apple for the phone.

Is this not the case in the states? Seems like a bit of a rip off to charge customers for a full price iPhone contract when the carrier doesn't end up having to pay Apple for anything?

Pretty much. Which is why here it really makes no sense not to buy a subsidized phone unless you think you might want to change carriers. Cause if you are pretty sure you are happy with the carrier, you only end up paying more if you buy a phone out of contract.

 

[Diode]

Do US carriers not make a difference between people who are getting an iPhone contract and already have the phone and those who join and buy the phone from them?

At least in the UK, if you have an unlocked iPhone and go to any carrier, you'll be able to get a much cheaper SIM only contract, as the carrier doesn't have to pay Apple for the phone.

Is this not the case in the states? Seems like a bit of a rip off to charge customers for a full price iPhone contract when the carrier doesn't end up having to pay Apple for anything?

In the US, only T-mobile provides a cheaper SIM only plan.

 

[HyperX13]

I went through three iPhone 4s' before I finally got one where the battery did not drain at 1 percent a minute and did not reach super high temps. I wonder if those numbers were counted?

 

[Small White Car]

It's absolutely a benefit to Apple.

The people who have gotten my old phones were NOT about to buy some other Smartphone. It was my free iPhone or a dumbphone.

And now they're in the Apple ecosystem. Forget whether or not they'll buy a new iPhone in the future. They're ALREADY buying apps and using iTunes.

There's no down-side for Apple with those users. They were never going to sell them a 4S anyway.

 

[phape]

US Carrier Practices

Do US carriers not make a difference between people who are getting an iPhone contract and already have the phone and those who join and buy the phone from them?

Of the major carriers, only T-Mobile accounts for this with their Value Plan. Probably not coincidental that T-Mobile does not fully support the iPhone.

 

[johncrab]

An "Education Event" in the USA...seems at odds with reality.

 

[Consultant]

Carriers should allow unlocked iPhone, which would have even higher resale value.

 

[hobo.hopkins]

The high resale value of Apple gear has always been known. It says a great deal about the value proposition consumers recognize in Apple products, old and new.

The same can't exactly be said for the competition.

Exactly; this always has to be factored in to the inherent "worth" of Apple products.

An "Education Event" in the USA...seems at odds with reality.

Well hopefully Apple can change that perception, and turn it all around

 

[george-brooks]

I always give my old iPhone to my mom when I upgrade and we sell hers. I'm shocked at how well even the older models keep their value!!

 

[briansolomon]

I first bought a used iPhone to see how much I'd take advantage of its features. I didn't want to locked into a 2 year contract if I didn't feel I needed it. I bought a new iPhone 4 just over a year later.

 

[fabian9]

Pretty much. Which is why here it really makes no sense not to buy a subsidized phone unless you think you might want to change carriers. Cause if you are pretty sure you are happy with the carrier, you only end up paying more if you buy a phone out of contract.

In the US, only T-mobile provides a cheaper SIM only plan.

Of the major carriers, only T-Mobile accounts for this with their Value Plan. Probably not coincidental that T-Mobile does not fully support the iPhone.

Wow, did not know that! That's ridiculous!

 

[paul4339]

Under Gifting:

Blackberry is 15%, but Android is 9%.

How do you interpret this?

\.

 

[ericinboston]

The reason why 2/3 of the older iPhones being given away (free) is that the iPhone 3GS (what I had before the 4S) was GIVEN AWAY FREE BRAND NEW FROM ATT/APPLE. There was no way I could sell mine...who's going to buy a used iPhone from me (with 0 warranty) and have to sign a contract when they can get a brand spanking new iPhone 3GS for free (with warranty)?! Granted the freebie didn't have the tech specs as mine but still...I probably could have gotten at most $50 for my old iPhone on a very good day and I'd still be up at night wondering if they dug out all the data from my old iPhone (I trust my friends/relatives a bit more than a stranger)

I'm not discounting that iPhones are great...but this article doesn't even mention the freebie giveaway from ATT/Apple.

I would also argue that about 1% of iPhone 4 owners upgraded to the 4S...and gave away their old unit for free. There was no iPhone 4 freebie.

 

[BiggAW]

A used iPhone is still a very usable phone (looking at my old 3Gs that can still run the latest iOS version), while an old Android phone might not (hell even new Android phone some times don't run the latest OS...)

Yup. 3GS and newer and all perfectly usable, since they are updated to 5.0.1. My Android phone from a year and half ago... not so much. Unless you install your own ROM, it's still on Froyo.

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The reason why 2/3 of the older iPhones being given away (free) is that the iPhone 3GS (what I had before the 4S) was GIVEN AWAY FREE BRAND NEW FROM ATT/APPLE. There was no way I could sell mine...who's going to buy a used iPhone from me (with 0 warranty) and have to sign a contract when they can get a brand spanking new iPhone 3GS for free (with warranty)?!

They'd have to use an upgrade slot. Buying a used one with no contract/upgrade is a smart buy, signing a contract on a 2.5 year old device is just stupid. Also, a lot of families have the tech-savvy people who are constantly upgrading, and others who are glad to have free or under-priced hand-me-downs because they don't want to/ can't spend the money on a new phone. Or they trade a year-old phone for an upgrade slot...

 

[paul4339]

...but this article doesn't even mention the freebie giveaway from ATT/Apple.
...

But does this apply to other phones (free phone on the purchase of a plan) as well?

 

[ScottHammet]

[url=http://cdn.macrumors.com/im/macrumorsthreadlogodarkd.png]Image[/url]


...CIRP suggests that those low-priced used handsets are a common way to introduce new users to the iPhone ecosystem. That introduction then sets the users up for future purchases of new iPhones and other Apple products.Beyond future hardware sales, the used iPhone market also increases the user base and market for apps and other iTunes Store content, with the device's able to serve more good than if they had been discarded or forgotten in a drawer.

Article Link: Robust Market for Used iPhones Benefits Users, Carriers, and Apple

I can attest to the suggestion that used iPhones draw new users into the ecosystem. I picked up my wife's old iPhone when she got a new one, and within a few days ditched my Windows phone. From there, I got an iPad, then the following year ditched my PC for a new Macbook Pro. Full convert in 18 months. Zero Microsoft anything in my house. I even ditched my Linksys routers in favor of Airports. And it all just works. This from a lifer PC user that wasn't unhappy with the PC, but simply discovered that Apple products are better.

 

[BernyBoyd]

No kidding !

I've been doing this for years myself and in fact, i rarely loose money when a resale the used stuff i have bought! Started with the Ipod touch 1st gen, then the 4th gen, then went to the iPhone 3gs, replaced it with the iPhone 4. Later bought a 3G for my wife, and replaced it 3 months later with another iphone 4, we are now on the same plateform and can communicate with Skype and MagicJack using iPad data plans only !

Tech these days is good! Big difference with when i started playing with computers and 300 bauds modems....

 

[ericinboston]

Yup. 3GS and newer and all perfectly usable, since they are updated to 5.0.1. My Android phone from a year and half ago... not so much. Unless you install your own ROM, it's still on Froyo.

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They'd have to use an upgrade slot. Buying a used one with no contract/upgrade is a smart buy, signing a contract on a 2.5 year old device is just stupid.

1)90% of the phone users out there are clueless on all the options they truly have regarding phones, plans, upgrades, contract extensions, etc. An extremely high percentage of folks are going to see all the "FREE IPHONE!" ads from ATT and go with that option rather than trying to research how Fred's old iPhone will get on their plan, how to erase the old data, set it up, etc. ATT is not going to help them with a phone they got/purchased outside of ATT.


Anyway, interesting article but I think it's flawed with the "2/3" metrics.

 

[fairoasis]

Wirelessly posted (Mozilla/5.0 (iPhone; CPU iPhone OS 5_0_1 like Mac OS X) AppleWebKit/534.46 (KHTML, like Gecko) Mobile/9A405)

My purchase of the iPhone 4S resulted in the gifting of not one, but 2 phones from different platforms. I replaced my Android on Verizon with the 4S, giving the Android to my college student niece. This allowed me to drop my out of ontract AT&T plan as my iPhone carrier, and gifting my iPhone 4 to my sister. She was on a fabulous grandfathered plan with AT&T but didn't want to lock in into two more years for the sake of trying out an iPhone. In just a short time, she is a convert and says she'll never use anything else.