Refurbished Smartphones an Attractive Option for Consumers

The market for refurbished phones is forecast to be about $3 billion in 2015 and growing to $5 billion in 2017 in North America and Europe.

smartphones and gartner

Sixty percent of consumers are replacing their smartphones because they want additional functionality, or they just want a new device, according to a survey of more than 5,600 U.S. and German consumers conducted by IT research firm Gartner.

Based on this evidence, Gartner is projecting that the worldwide market for refurbished will grow to 120 million units by 2017, with an equivalent wholesale revenue of around $14 billion--up from 56 million units in 2014, with an equivalent wholesale revenue of $7 billion.

"High-end smartphones are most sought after. Our brand strength surveys show that Samsung and Apple have the highest rankings, way ahead of any other smartphone brand," Meike Escherich, principal research analyst at Gartner, told eWeek. "The premium phone market has experienced dramatic growth over the past two years, including phones with price tags of more than $300."

She said consumers intending to upgrade basic phones to premium ones may consider refurbished phones from premium brands such as the Samsung Galaxy or the iPhone, and this is because the refurbished versions of these premium devices sell for half or two-thirds of the original price, depending on the model and state.

In North America and Western Europe, the market for refurbished phones is forecast to be about $3 billion in 2015 and growing to $5 billion in 2017, according to the report.

Tech enthusiasts generally are early adopters and trendsetters, and constitute around 25 percent of the U.S. sample.

"We recommend that vendors convey sophisticated data wipe procedures to consumers when implementing device return programs, as privacy is still a major concern for consumers," Escherich noted.

More than half (53 percent) of respondents said they would replace their smartphones in the next 12 months, with 56 percent claiming that their current phones were less than a year old.

"The market is still characterized by demand outweighing supply. Faster refresh means more available volume of less than two year old devices," Escherich said. "That drives down prices for used phones. Just try and compare prices on eBay during the year. You see a drop in pricing just after a new release."

Nearly half of the survey respondents said that their purchase of replacement phones would be driven by new features or functionality that can be found only in the new devices.

"We do expect to see higher-volume demand in emerging markets," she said. "But demand for used phones--especially private sales like eBay or Gumtree--are still increasing in markets like the U.S. and Western Europe."