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While sales of new smartphones fell again last year, the used market continues to go from strength to strength.
January 23, 2024
New stats from IDC put the number of used smartphones shipped in 2023 at 309.4 million, up a respectable 9.5 percent on the 282.6 million shipped in 2022. To put that into perspective, if – hypothetically – the used market was comprised of a single smartphone maker, that smartphone maker would comfortably be the biggest one in the world.
Continued growth is in the forecast too. IDC reckons used smartphone shipments will reach 431.1 million by 2027, representing a compound annual growth rate (CAGR) of 8.8 percent. By comparison, IDC published some numbers regarding the regular smartphone market last week that showed a 3.2 percent decline in annual shipments.
Understandably, the value of the used market is growing as volumes rise. IDC predicts it will be worth $109.7 billion by 2027, up from $64.7 billion in 2023.
However, that aforementioned CAGR of 8.8 percent is noticeably lower than the 9.5 percent growth recorded over the last 12 months, and indicates that it is not all plain sailing.
According to IDC, the used smartphone market has an inventory problem.
It says the popularity and high price of today's flagship smartphones means that people are holding onto them for longer – typically more than 40 months. This is a problem because one of the main drivers of the second hand market is that customers like the idea of getting hold of a flagship at a discounted price. This is harder to do though when replacement cycles are so long.
"Despite the near 10 percent growth, the secondary market is showing signs of slowdown due to a genuine lack of inventory," said Anthony Scarsella, research manager with IDC's worldwide quarterly mobile phone tracker.
"With refresh rates extending in most mature markets, acquiring inventory remains the biggest challenge for resellers," he said. "Secondary phone retailers are hungry for inventory as the high end of the market continues to be scarce due to customers just holding on to their devices."
Indeed, as well as the second-hand market, the high end is where a lot of the action is.
Figures from Counterpoint Research earlier this month indicated that global sales in the premium segment increased 6 percent year-on-year in 2023. These are devices that come with a wholesale price tag of at least $600.
Within this area of the market, the ultra-premium, $1,000+ segment is expected to have accounted for more than a third of sales.
Again, this has a bearing on replacement cycles. Counterpoint suggests that people are prepared to shell out more money for a phone they expect to use for a longer period of time.
All in all, this points to a general perception that new smartphones offer incremental, rather than revolutionary improvements over models that are a year or more older. OEMs have tried to reignite interest with innovations like foldable screens, but the stats show these are yet to have a meaningful impact on shipment volume.
This might garner renewed interest from prospective punters, but looking at IDC's new stats, the smart money's on consumers continuing to hunt for second-hand bargains.
Nick is a freelancer who has covered the global telecoms industry for more than 15 years. Areas of expertise include operator strategies; M&As; and emerging technologies, among others. As a freelancer, Nick has contributed news and features for many well-known industry publications. Before that, he wrote daily news and regular features as deputy editor of Total Telecom. He has a first-class honours degree in journalism from the University of Westminster.
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