June 8, 2018
The mobile phone market has evolved significantly over the years. A mobile phone from 2002 or even 2010 pales in comparison to the newest smartphones. From phone buying (payment structures, service contracts) to usage (photos, music streaming, storage needs, how long a device is kept) — almost everything has changed.
Not only has smartphone financing evolved from an outright purchase to a monthly payment structure, the phones themselves have evolved quickly. The latest models boast larger screens, longer battery life and powerful cameras, but all the new technology has driven up retail prices, creating a larger financial hit when it comes to depreciation. As a result, consumers are tend to wait longer to upgrade these days.
The Average Selling Price (ASP) of smartphones is increasing (and continues to increase):
According to IDC, the average selling price of smartphones in North America increased by 6.78% from 2013 to 2017.
- Some models depreciate more than others: A Decluttr study showed that Apple models lost an average of 57% of their value within the first year. Samsung and HTC smartphones lost 72% of their value and LG phones lost 75% after a single year. After two years, most phones have lost 80% or more of their value.
- The lifespan of smartphones is increasing: Since people are keeping their smartphones longer (higher prices, updated models not deemed significant enough, etc.), the period of time between upgrades has increased. By 2019, global projections for IDC and Morgan Stanley show that the average time between upgrades of smartphones will be 2.75 years (over 33 months) by 2019.
Naturally, these trends impact the overall supply chain for mobile devices and smartphones. The head of our U.S. Mobility division shared that smartphones depreciate 3-5% on average a month during the 24 months after purchase. This sheds some light on a few of the points above. Since products lose value quickly, fast turn-around on returns (reverse logistics) is critical. With the average price of smartphones increasing, the aftermarket sales price for smartphones will garner higher prices as well, so any delay in moving used devices into a secondary market results in a greater financial impact than it would have had only a couple of years ago.
The take-away? Having a comprehensive supply chain strategy for smartphones and mobile devices is important — not only for smartphone manufacturers, but also for carriers.
To learn more about Ingram Micro Commerce & Lifecycle Services’ forward and reverse logistics solutions, click here.