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Hand-me-down iPhones good for both carriers and Apple, study finds

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iPhones entering a growing "secondary market" from upgrading owners are allowing carriers to increase subscribership without paying subsidies as Apple gains new initiates to its iOS ecosystem.

A study released on Tuesday by Consumer Intelligence Research Partners (CIRP) found that the secondary mobile phone market, or used handsets that find new life with a second owner, has blossomed since the launch of the iPhone 4S in October 2011 and could be a source of found income for both telecoms and Apple, reports All Things D.

The study reveals that old iPhones often see new life as an economical way of entrance into the Apple ecosystem and helps to explain some of the incongruities seen between the number of carrier activations and handset sales data.

CIRP notes that 53 percent of new iPhone owners introduced their old handset to the secondary market, with a majority 49 percent being older iterations of Apple's popular mobile smartphone, followed by Blackberry with 21 percent and Android with 15 percent. Remaining handsets entering the secondary market were specified as "other" and constituted another 15 percent.

“IPhones also had the advantage of having a useful second life as iPod touch substitutes, which made their used value a little clearer from the start," said CIRP co-founder Mike Levin. "As a GSM phone, AT&T iPhones also could be [unlocked] for use on other GSM networks, so there was an early secondary market for iPhones on other carriers — though this was, of course, limited to more savvy and aggressive technology consumers.”


Source: CIRP

Of the surveyed new phone buyers who gave their old iPhone to another person, 87 percent said they expected the recipient to actiate the smartphone on a wireless network.

CIRP estimates that 11 percent of iPhone activations in the test period were previously-used handsets, meaning that carriers gained new iPhone subscribers without having to pay subsidies to Apple. The firm guesses that AT&T and Verizon saved between $400 million and $800 million in subsidy costs, or about $400 every secondary market iPhone activated. Analysts estimate that iPhone sales for the first fiscal quarter range from 25 million to 36 million units.

While the economic boosts from the burgeoning secondary market are somewhat quantifiable for mobile carriers, Apple's gains are more subjective.

“We think the secondary market is both detrimental and beneficial to Apple,” Levin said. “It hurts Apple because it creates competition for new iPhones, which we see in the relatively modest sales of reduced-price iPhone 4 and free iPhone 3G units. But it also benefits the company because used iPhone customers aspire to own the newest and best iPhone, so they are likely future new phone customers. In fact, they are likely new entrants to the Apple ecosystem, who otherwise would not have found a way in.”

New secondary market iPhone users are also potentially new iTunes users who will make music, video and app purchases, and may be candidates to buy existing or future Apple devices once integrated into the company's ecosystem.

38 Comments

solipsismx 14 Years · 19562 comments

Apple is so stupid for making their devices so desirable and well made that they can be used years later. If only they were smarter like other vendors.

bagman 15 Years · 349 comments

They need another category - thrown away or scrapped - which would show how Apple products are seldom merely discarded, and keep their value well beyond any android or blackberry product. How many competitors' products are sitting in the back of drawers among discarded electronic junk?

I have sold my iphones (sold 3 over the last two years) for$280, $330, and $360. Anyone want to guess what the "latest" one-year-old android or blackberry would sell for?

solipsismx 14 Years · 19562 comments

Quote:
Originally Posted by Bagman

Anyone want to guess what the "latest" one-year-old android or blackberry would sell for?

There are several sites that buy back old CE we could check we could compare to how much they pay for iPhones.

sflocal 17 Years · 6167 comments

Quote:
Originally Posted by SolipsismX

Apple is so stupid for making their devices so desirable and well made that they can be used years later. If only they were smarter like other vendors.

I find it funny that Android phones are less likely to be given as a gift compared to a blackberry or "Other". What does that say about P.O.S Android phones?

I'll wait for an Android shill to spin it as "Android phones are so valuable, that no one wants to part with theirs."... </sarcasm>

MacPro 19 Years · 19862 comments

Quote:
Originally Posted by SolipsismX

Apple is so stupid for making their devices so desirable and well made that they can be used years later. If only they were smarter like other vendors.

It is amazing really, for years built in obsolescence was seen as the only way to make money in hardware and this upstart Apple comes along with this wacky new paradigm; make things well that people pass on and actually want another newer one ... truly original thinking. Cool thing too is this idea is a bit harder to copy!