(CNN Business) — Apple this week expanded the price range for your flagship smartphones, advertising iPhone 12 mini at $ 699 for users who are reluctant to spend more than US $ 1,000 on more premium models.
But for people who want to spend even less – in one case, absolutely nothing – to upgrade, Apple and the major wireless service providers offer steep discounts to those who exchange their old devices.
T-Mobile and Verizon offer customers trade-in credits ranging from $ 200 to $ 850, depending on how old their phone is and whether they already have a plan with the carrier. AT&T, meanwhile, will effectively give customers a free phone if they commit to a unlimited data plan for 30 months while also trading in older phones worth at least $ 95. (AT&T (T) owns CNN’s parent company, WarnerMedia).
Apple and other smartphone makers also offer their own trade-in programs, as do some third-party resellers. Apple currently offers discounts of up to $ 500 for the iPhone 12 line if you trade in your old smartphone, depending on its age and condition.
The exchange values of old smartphones can be surprisingly high because the exchange has become a fundamental part of the device life cycle. Beyond giving users the opportunity to get a new phone for a fraction of the price, it helps companies drive sales by generating more frequent updates, it gives operators a way to attract customers to long contracts, delivers more affordable devices to secondary markets and provides materials that companies can reuse to make new phones greener.
The upgrade drive
Trade-in programs give wireless service providers and manufacturers a way to attract new customers and prevent existing users from abandoning their products, as we saw with AT & T’s free iPhone offering.
“It’s probably the closest thing to reviving subsidies, which were rife in America when the iPhone hit the market,” said David McQueen, director of research at technology advisory firm ABI Research.
A major issue the exchanges aim to address is the growing trend of smartphone users to keep their devices for longer, often skipping a model or two (sometimes even more) before buying a new one.
“Subscriber motivation to upgrade smartphones has been a problem in recent years and most flagships have very little differentiation from their predecessors,” McQueen said.
While companies hope that the speeds and features of 5G will provide reason enough to upgrade, industry estimates point to the fact that such capability not really that important factor for the consumers. The still nascent spread of 5G networks around the world and limited use cases for smartphones compared to more advanced technology such as self-driving cars will likely lessen the appeal for some people to switch yet.
“At the moment, there does not seem to be any real reason to demonstrate the [operadores] to upgrade to 5G, apart from being marketed as another ‘G’, “added McQueen.
It’s too early to tell how well the iPhone 12 lineup will sell, but if 5G isn’t a huge draw, exchanges could help move additional updates.
Back to the market
Smartphones often have a lifespan and usability that go well beyond the frequency of new model launches, providing businesses with an additional source of revenue for even older devices.
Apple shipped more than 11 million devices for refurbishment in 2019, according to the latest environmental report of the company.
McQueen says that phones that aren’t resold by smartphone carriers or companies could 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 price conscious.
Most of the growth in the refurbished smartphone market last year came from regions like India, Latin America and Africa, according to a recent report de Counterpoint Research.
The programs also sell refurbished phones to users willing to buy slightly older premium models, analysts say.
«[Es] something like the used car market; there are some people who would rather have an older Mercedes than a 2021 Hyundai, “said Ross Rubin, principal analyst at Reticle Research. “This allows them to have more aspirations, in a sense, without having to pay the $ 700 or more to buy the current generation.”
And it is a trend that seems to be getting stronger. Research firm IDC predicted earlier this year that around 333 million used smartphones will be sold in 2023, almost double the number sold in 2018, for a total market value of US $ 67 billion.
What’s inside matters
Another reason old phones are valuable to businesses is because of their content.
Apple has worked to curb the environmental impact of its massive global manufacturing operations, expanding recycling programs and promising to become fully carbon neutral by 2030.
“Manufacturers have emphasized this approach more, they talk about the recycled materials they use to make their phones,” said Rubin.
As part of that effort, Apple promoted this commitment to sustainability during the iPhone launch event on Tuesday, and boasted that the magnets in the iPhone 12 line are made from 100% recycled earth materials. For several years, the company has developed and displayed robots that disassemble older iPhones and separate components that can be reused for new devices. The company also recycles other materials such as aluminum and tungsten that are used in new products.