But for people who want to spend even less – in one case, absolutely nothing – to upgrade, Apple and major mobile operators are offering huge discounts to those who trade their old handsets.
T-Mobile and Verizon are offering customers exchange credits ranging from $ 200 to $ 850, depending on the age of the phone and whether they already have a plan with the operator. Meanwhile, AT&T will effectively offer customers a free phone if they commit to an unlimited data plan for 30 months, while negotiating older phones worth at least $ 95. (AT&T owns CNN’s parent company WarnerMedia ).
Apple and other smartphone manufacturers also offer their own exchange programs, as do some third-party resellers. Apple currently offers discounts of up to $ 500 for the iPhone 12 line if you change your old smartphone, depending on your age and condition.
The exchange values for older smartphones can be surprisingly high because the exchange has become a critical part of the device’s life cycle. In addition to providing users with the opportunity to get a new phone for a fraction of the price, it helps companies increase sales by requesting more frequent updates, gives operators a way to attract customers for long contracts, delivers more affordable devices to secondary markets and provides raw material materials that companies can reuse to make new phones more environmentally friendly.
The update push
The exchange programs offer cell phone operators and manufacturers a way to attract new customers and prevent existing customers from stop using their products – as we saw with AT & T’s free iPhone deal.
“It’s probably the closest thing to reviving subsidies, which abounded in the United States when the iPhone first hit the market,” said David McQueen, director of research at technology consultancy ABI Research.
A big problem that exchanges aim to solve is the growing tendency of smartphone users to hold their devices for longer, often skipping one or two models (sometimes even longer) before buying a new one.
“The motivation of subscribers to update their smartphones has been an issue in recent years, with most flagships having very little differentiation from their predecessors,” said McQueen.
While companies expect 5G speeds and capabilities to provide sufficient reasons for the upgrade, industry estimates point to the fact that such capacity is not really a significant factor for consumers. The still incipient spread of 5G networks around the world and the limited use cases for smartphones compared to more advanced technologies, such as autonomous cars, are likely to diminish the appeal for some people to switch places yet.
“At the moment, there appears to be no real reason shown by (operators) to upgrade to 5G, other than being marketed as just another ‘G’,” added McQueen.
It is too early to know how well the iPhone 12 line will sell, but if the 5G is not a big draw, exchanges can help promote further updates.
Back to the market
Smartphones generally have a useful life and utility that goes far beyond the frequency of new model launches, giving companies an additional source of revenue, even for older devices.
Apple sent more than 11 million devices for renovation in 2019, according to the company’s latest environmental report.
McQueen says that phones that are not resold by operators or smartphone companies may also end up with insurance companies to replace lost or broken devices for their customers or shipped to emerging markets, where consumers tend to be more concerned with prices.
Most of the growth in the retired smartphone market last year came from regions like India, Latin America and Africa, according to a recent report by Counterpoint Research.
The programs also sell refurbished phones to users willing to buy slightly older premium models, according to analysts.
“(It’s) like the used car market; there are some people who prefer an older Mercedes than a Hyundai 2021,” said Ross Rubin, principal analyst at Reticle Research. “This allows them to have more aspirations, in a sense, without having to pay $ 700 or more to buy the current generation.”
And it is a trend that is likely to get stronger. Research firm IDC predicted earlier this year that there will be about 333 million used smartphones sold in 2023 – almost double the number sold in 2018 – for a total market value of $ 67 billion.
What’s inside matters
Another reason why old phones are valuable to companies is what they contain.
Apple has been working to contain the environmental impact of its huge global manufacturing operations, expanding recycling programs and promising to become fully carbon neutral by 2030.
“Manufacturers have emphasized this focus more, they talk about the recycled materials they use to produce their phones,” said Rubin.
As part of that effort, Apple praised this commitment to sustainability during the iPhone launch event on Tuesday, boasting that the magnets in the iPhone 12 line are all made from 100% recycled rare earth materials. For several years, the company has been developing and exhibiting robots that dismantle old iPhones and separate components that can be reused for new devices. The company also recycles other materials, such as aluminum and tungsten, which are used in new products.