Refurbished Smartphone Market Offers Pros and Cons for Handset Makers
Sales of refurbished phones could hurt new phone sales, but at the same time, they can add service revenues, according to ABI Research.
The global smartphone business, already feeling the weight of market saturation, could face new challenges from increased sales of cheaper, refurbished phones over the next five years, adding to the building pressures on device makers. That's the conclusion of David McQueen, an analyst with ABI Research, who told eWEEK that changes in the smartphone market, including moves away from two-year contracts and customers who are keeping their smartphones longer are contributing to a reduction in the number of phones sold each year. And as refurbished phone sales grow, that will ultimately cause some problems—as well as some potential benefits—for phone vendors, he said. What it all ultimately depends on, said McQueen, is where those refurbished phones are sold. If they are sold in the United States, they could take away sales revenue from the flagship phones of vendors like Apple, Samsung and LG. But if these handsets are sold in developing nations such as India, where flagship phones are too costly for most residents, the refurbished phones could help those vendors still generate money from content, apps and services, which would be a positive, said McQueen.
For 2016, ABI Research estimates that global smartphone and mobile phone sales for new devices will increase by 4.9 percent. However, the research firm also expects that the influx of refurbished phones will likely push manufacturers to reconsider their branding options and portfolios in the regions where they sell their devices.