Operators hoping for an iPhone 15 boost may be disappointed
Despite 2023 being the worst year for global smartphone shipments in around a decade, analysts CCS Insight said the market for used smartphones is now outshining that for brand-new devices – growing 14% YoY to $13.3bn in Q1.
The global cost-of-living crisis has been a major driver in pre-owned devices adoption even though European trade-in volumes reportedly seeing woeful levels. For EMEA operators, declining device revenues are already becoming the norm as national and international retailers and marketplaces such as Back Market, refurbed, eBay and Amazon dominate sales.
The net result is new mobile service plans are typically adopting more-for-more pricing packages as operators are also struck by the double whammy of needing to discount premium models more heavily to maintain top-end market share.
Apple’s iPhone range continues to dominate the secondary market, expanding its market share for five consecutive quarters, mirroring a trend seen in the primary phone market. This has also boosted the number of active users of iOS compared with Android – the latter dominating the low-to-mid end of the market.
Telia Norway confirmed the trend saying the Samsung Galaxy S21 Ultra was the only Android model stopping Apple from taking all the places on its top 10 list of used phone sales – which has increased overall by 4% QoQ.
“There is a lot of money to be saved by buying a nicely used mobile phone, and it is also a good choice for the environment,” said Siv Færø, responsible for sales and channel management for the private market at Telia. “Apple iPhone 11 is the most popular used phone in the second quarter, just like in the first quarter…Six out of ten phones support 5G.”
Last November the telco hit 100k used phones sold and is now looking to expand its range to include tablets and smart watches.
“Unlike traditional supply chains, this market relies on consumer trade-ins, which are proving to be the biggest challenge for the industry to reach global scale,” said CCS Insight analyst Kane McKenna. “Mobile operators in the US are clawing back phones from consumers much more effectively than others, but this hasn’t been enough to stop trade-in levels flattening in recent quarters.”
The landscape is dominated by mobile operators, Apple and Samsung, which source almost three out of four products that enter the circular supply chain, he added. But these companies represent fewer than one in four of the units sold to consumers and enterprises, with resellers and marketplaces making up the lion’s share of volumes to these customers.
“This market has plenty of headroom to grow and will generate revenue as well as lessening the impact of mobile devices on the environment,” added CCS Insight VP research Simon Bryant, adding the market could reach $40bn.
New handset market shrinking but flight to premium still evident
The growth of the second-hand market leaves mobile operators in a dilemma around boosting the availability of trade-in options versus slowing down the subscriber base migration to 5G services if their users adopt more affordable but also less capable phones.
But doing nothing is not an option. According to analysts Counterpoint, 2023 is on track to be the worst year for global smartphone shipments in ten years, declining 6% to 1.15bn units. IDC’s Worldwide Quarterly Mobile Phone Tracker Separately showed that the global smartphone market saw four straight quarters of shipments decline, resulting in the lowest number of shipments in years.
“There’s been a decoupling between what’s happening in the economy and consumers buying phones. So far this year it’s been record low upgrades across all carriers,” said Counterpoint North America research director Jeff Fieldhack.
“But we’re watching Q4 with interest because the iPhone 15 launch is a window for carriers to steal high-value customers. And with that big iPhone 12 installed base up for grabs promos are going to be aggressive, leaving Apple in a good spot,” he added.
2023 could mark the start of a new era for Apple as a resilient premium market, plus a strong showing in the US, could help it become number one globally in terms of annual shipments for the first time ever at the expense of Samsung.
Analysts Omdia also expects that global smartphone shipments will decline again this year. In particular, the slump in the mid- to low-end market – read Android phones – is expected to continue into the second half of this year, and the flight to premium will continue with the arrival of the new iPhone 15 series.
Omdia said the iPhone 14 Pro Max is the most shipped smartphone worldwide in the first half of this year – with the iPhone 14 Pro in second place – demonstrating how Apple is dominating the premium end in a declining market overall.
Apple’s iPhone 15 price rises won’t help telcos
The best test of whether Apple can single-handedly reverse the fall in smartphone shipments around the world will come when it launches the iPhone 15 range around 12 September. The new range is widely expected to be Apple’s most expensive ever. Digitimes reported that the iPhone 15 Pro Max will see a potential price rise of up to $200 and even the iPhone 15 Pro will go up $100.
According to Forbes, sales of the iPhone 14 and iPhone 14 Plus, while increasing in recent months, have largely underwhelmed. The iPhone 14 Plus is priced at just $100 less than the iPhone 14 Pro, and the difference becomes insignificant over an average two-year carrier contract. The iPhone 15 models are poised to make the gap between Pro and non-Pro versions much bigger.
Regardless of the boost Apple will get from the launch, mobile operators in both North America and Europe have already indicated they will be offering significant iPhone 15 discounts due to falling smartphone demand. These moves are unlikely to hit Apple’s bottom line, as the mobile operators are planning to bundle more minutes and data to create attractive multi-year contracts rather than any direct price reductions on the phones themselves.