Deloitte Counted 120 Million Used Smartphones Were Sold in 2016 (growth of 50% vs 2015) - Understanding the second-hand handset market

About 7.5 % of all smartphone sales last year were used smartphone, second-hand smartphones. Deloitte counts the market at 120 million units in 2016, up from 80 million the year before. While the total new smartphone sales were essentially flat for year 2016 vs 2015 (we'll know in a few weeks when the final numbers are out, could be up or down about one percent) there WAS growth in actual purchases of smartphones last year, vs 2015. That was driven by the used-phone market. The second-hand smartphone market grew by 50% compared to year 2015. Deloitte counted 80 million total second-hand smartphone sales in 2015 and now 120 million in 2016 (ie 50% growth year-on-year). Seeking Alpha has the article relating to Deloitte's count. If the global new sales smartphone market was exactly flat, at about 1.5 Billion smartphones sold last year, then the used market helped nudge the total market to an annual growth rate of 2.5%. And 120 million handset sales per year is nothing to sneeze at. Its more than total digital camera sales (and every used smartphone has a camera) and its about the same number as total desktop PC sales (this year 2017, used smartphone sales will be greater than total new desktop PC sales). And obviously, every smartphone, even if used, can do Facebook and Google and go to Amazon to do some e-commerce.

Now why is there this market and how do phones 'get' into the second-hand market. A part of that is the intake of old phones when phones are replaced. Old phones are then refurbished at the factory and if you get a warranty replacement phone for your phone, that is likely going to be a refurbished unit, not a new phone. But its a small part of the total business. We get some interesting numbers from Australia. A fresh study by Finder.com.au reported at Finder.com has measured the various ways that Australians get rid of their older smartphones. I would think these are 'indicative' and reflect typical behavior in most mature smartphone markets where new sales of smartphones are in the 90% of all phones sold stage (countries like Hong Kong, UAE, Australia, Singapore, the Scandinavian countries etc) and most owners are typically on their third or fourth smartphone already. So compared to the USA, this is like a snapshot about 2-3 years into the future.

In Australia, 33% of old smartphones are kept by the owner but forgotten. 24% of Australians will hand their old phone to a relative of friend as a hand-me-down phone. 18% will recycle the smartphone. 9% will sell the smartphone at eBay or hand it in at the store for credit when replacing. And 6% will toss the old phone out with the rubbish. Then there is the miscellaneous last 10% that would include broken phones, lost phones, eaten-by-sharks phones, eaten-by-Crocodiles phones (its Australia, after all), The kangaroo-stole-my-phone, phones; bitten by-poisonous-spider phones, carried away by huge vicious man-eating poisonous-insects phones etc. But yeah, 69% of Australians will replace their smartphone 'prematurely' well before their old phone would not meet their current needs. This too would be a typical global phenomenon in leading countries (something we observed in Hong Kong and Japan years ago).

Where do the used smartphones end up? Mostly in less developed countries. There are huge second-hand-phone markets in most major shopping centers in the Emerging World that are stocked with miles and miles of Samsungs, iPhones and haha, yeah, still tons and tons of Nokias. The local brands will be there of course but even the typical 'top 10' brands we look at on this blog, the LGs, Huaweis and Lenovos, or the previous ones like SonyEricssons, Blackberrys and HTCs, are far less prominent. They depend on the local market success in that given country.

So now we have some numbers. 120 million unit sales in 2016 were second-hand used smartphones globally. When we add it to the approx 1.5B we get total smartphone market (new and used) of 1.62B (roughly) and thus used smartphones would account for 7.5% of the total smartphone market worldwide. As we have a replacement cycle that is growing longer, Citigroup reported the handset replacement cycle in 2016 had stretched to 29.6 months, so when we go back 30 months from mid-2016 (end of June 2016, half-point of year 2016), we see the sales of smartphones was 990 million (12 months to December 2013). So out of phones sold in year 2013, 12% (120 million) turned up as second-hand-phones (on average life expectancy) in 2016. That is not far from the 9% that the Australian study reported, that old phones are sold, especially, if we also account for the relative phones (24%) ALSO probably being then sold on eBay after their life, which gets us to 11%... Not bad. I like it when the math comes together. Of course I've been reporting on the used smartphone market for ages on this blog and in my publications. But its nice to see some others also report some numbers relating to this, quite relevant aspect of the total handset market and a growing slice of the global smartphone market.

Now if you need ALL the numbers on the handset market, new and used, smartphones and dumbphones, my brand new TomiAhonen Phone Book 2016 edition just was released exactly one month ago, with all stats current to December 2016. It only costs 9.99 Euros so it will not bankrupt you. See the table of contents and get your Phone Book 2016 here.

Comments

[Peter F. Mayer]

Please Tomi, let us know your views about the Nokia 6, it's success in China and possible upcoming smartphones.

[Tomi T Ahonen]

Hi Peter

Good early reception, is promising for the roll-out this Spring to most of markets where Nokia traditionally was/is strong brand. I am waiting to see the first full line-up of the first smartphones, which we should see in Barcelona in a few weeks. Then I'll have a far better understanding of what they're up to at HMD and can give some guidance. This first Nokia 6 was obviously their fastest-to-market rush-job just in time for Chinese New Year's sales last week. They had very nice initial success with that. I'd expect a relatively rapid roll-out of that model into wide sales from India to Africa etc.

Tomi Ahonen :-)

[Darwinphish]

Technically Deloitte did not "count" 120M used smartphones sold. Their report was a prediction.

[Per "wertigon" Ekström]

Regarding Apple unit numbers:

So, 78.29M. Now, given 400M-ish global units, Apple moving average market share has grown to 14.8%. That is impressive... Until you look at the context.

Apples main rival, Samsung, had to recall their top-of-the-line smartphone due to exploding batteries. We knew Apple would get a big boost out of this. So it makes sense. It seems like for every time Apple needs the competition to stumble, they stumble. Every single time.

So, congrats Apple for yet another easy year. I look forward to the day when Samsung or any other high-end Android manufacturer hits a homerun and then DOESN'T trip while running... :)

[Tester]

@Wayne:

"But iPhone marketshare globally continues to fall."

At least you notice that. Don't delude yourself. This is a clear indicator that the only markets where Apple can play out their strength is the ones where they have been the top brand before.
We will see where this goes. Apple is and remains strongest in markets with broken competition where high costs are hidden in obtuse pricing models. But the fact is, if you go out on the streets here in Germany, you very, very rarely see iPhones. They are simply not mainstream enough. Most people carry medium priced Androids.

"And this was achieved with a strong US dollar making the iPhone even more expensive everywhere else."

It's just that this argument is 100% bogus. It didn't make the iPhone more expensive everywhere else, economics do not work like that that prices are adjusted to currency exchange rates. This only hit Apple's profit line, nothing else.

And Per is right: A large part of Apple's success in the last quarter was due to Samsung being a virtual no-show and some customers switching to Apple as a result.

About the Apple Watch: It's nice that there's no numbers, it probably means just that Apple sold double of virtually nothing - it's still an irrelevant market segment, the population at large has no interest in smartwatches and that won't change.

You know what will really become interesting? Watching the app market implode and the transition to web apps. That would kill the biggest lock-in factor Apple still has and that development is inevitable. The cost of a native app is 10-20x that of making a web app - most of that money is lost in the submission bureaucracy, btw. We already know that making apps to generate revenue is a failed business model, and that the only way for developers to get some money is contract work. Well, think again! We developers rarely see customers who are willing to acknowledge that high cost, they think they can have it for cheap, just like a web app where they can pay some fixed sum and afterward to some casual maintenance. Native apps are a cost driving factor that gets massively underestimated by many service providers. It's inevitable that this part of the market won't last long, as soon as web apps are 'good enough' the game will be over. But what if the smartphone just becomes a dumb terminal for web services? I wonder how that will affect the market, as it'd eliminate the biggest reason for sticking to one 'ecosystem'.

[Per "wertigon" Ekström]

@Wayne: "Apple became the world's largest smartphone maker by unit volume. THAT is due to the exploding Samsung phone debacle and won't stand."

Eh, no? Even with the exploding note, Samsung has sold how many units compared to Apple? Why are you telling lies Wayne? :)

Furthermore, there is heavy consolidation coming along in the chinese brands which Tomi will probably report on in the next quarterly report / 2016 summary. So, Apple is not just #2 currently - they are #3! Possibly even Samsung could be #2 if that consolidation is taken into account.

Sadly, I have lost hope for Sony to recover, ever. Great phones still - but their marketing is such stupid fucktards, that Sony can never gain much of traction. I'll keep buying as long as they produce, but fortunately I always have the option of switching to Nexus or any other high-end Android brand.

If you go Apple... You're stuck with Apple. For better and worse. :)

[Huber]

@Per: "Sadly, I have lost hope for Sony to recover, ever. Great phones still - but their marketing is such stupid fucktards, that Sony can never gain much of traction."

True. I think we can add HTC and LG to this list.

Both the HTC 10 and the LG G5 were good phones. But both LG and HTC had no marketing to speak of, and LG topped it all by sending faulty pre-production LG G5s to reviewers last year, probably just to make sure to get bad reviews. What a bunch of morons.

And now in 2017, the LG G6 will come - DRUMROLL - with a non-removable battery and the outdated Snapdragon 821 SoC. Just when you think that things cannot get worse, the idiots in charge find new ways to alienate their customers!

[Per "wertigon" Ekström]

@Wayne:

There is more to a market than profits. Apple is betting heavily on profits, margins and apps.

All three are fleeting, unforgiving things that will turn on Apple eventually.

Apple is like Cersei Lannister right now - all their assets right now will run out, the question is only when.

Android, meanwhile, is like Daenarys Targaryen - came from nowhere, grew strong elsewhere, and swallowed the land whole eventually.

[John Phamlore]

I, who have no inside information, have an unfailing crystal ball that I have been using to unfailingly predict who will continue to sell well in the smartphone business. And I have been sharing it for over 5 years.

Who has their own ARM SoC? That alone determines who will be the longterm winners and who will be the also-rans.

A company that doesn't have their own ARM SoC isn't a true smartphone maker, they are merely a reseller of Android and Qualcomm or MediaTek.

[Per "wertigon" Ekström]

@Wayne:

Again. Apple is Cersei Lannister. Noone playing the Game of Thrones seriously take Cersei seriously, because they all know her power will fade soon.

What's left are the fools blinded by her beauty and/or afraid of her wrath. Not good things to base your kingdom on. Fast forward five years, and let's see what happens then... :)

As for things like Apple pay - doesn't matter if 90% of consumers cannot use it. Apple Music - Inaccessible to 90% of the general populace. Airpods - Inaccessible. Apple Watch - Inaccessible.

Apple has painted themselves into a corner with their 500M iPhone users, and that base will start shrinking soon-ish. It is inevitable.

Web apps - Safari is the new IE6 [1], holding the technology back, but sooner or later killer apps will appear that require more modern browsers, and that will hopefully happen sooner this time. And if Safari does fix the stuff they should, then there will be little reason to choose Apple over Android.

[1] https://news.ycombinator.com/item?id=12051267

[Winter]

@Per
"Web apps - Safari is the new IE6 [1], holding the technology back, "

I can agree with that.

I know of at least one client side JS Web App that runs on ALL PC OS', Linux, OSX, and Windows and also in Android. It runs on Firefox, Edge, and Google Chrome and all its derivatives. It is marvelous to see the same code run inside a browser on every PC or Android appliance. And the whole app will store locally in the browser and can run offline. It really works on an Android phone without an internet connection.

Alas, it really needs WebRTC sound. So, everything works on Safari, except for the sound and the offline part (I think), and it does not run at all on iOS. That does bring me back to the old IE6 days where your website JS would work on IE6 or on other browsers, but not both. Except, that this will not work in ANY way on iOS.