In the ever-evolving landscape of smartphone sales, the second-user market plays a pivotal role, not just for consumers but also for tech giants like Apple. While the focus often remains on new product sales, the realm of second-user devices and related services is equally significant. According to Morgan Stanley, each iPhone user contributes an estimated $72 annually in services revenue to Apple, regardless of whether the device is brand new or second-hand. This steady stream of services-related income adds resilience to Apple’s revenue flow, especially during economic uncertainties.
The second-user smartphone market is a substantial force to reckon with. Research from Circana and B-Stock shows that a considerable 11% of US consumers opted for pre-owned devices in 2024, driven by a desire for affordability without compromising quality. IDC projects a 5% annual growth rate for the used smartphone market, outpacing the growth rate of new devices. This trend is not confined to the US but extends globally as consumers increasingly embrace refurbished and second-user smartphones.
Beyond financial considerations, environmental consciousness also propels the popularity of second-user devices. With a growing awareness of electronic waste’s impact, consumers are gravitating towards devices that support a more sustainable circular economy. IDC estimates the second-user market to be worth $72.9 billion in 2023, with over 195 million devices shipped. This figure is projected to rise to 257 million units worldwide by 2028, with Apple and Samsung leading the charge, reflecting strong demand in both the new and second-user device markets.
In the competitive realm of new smartphone sales, Apple has maintained its position by catering to premium demands. Canalys’ senior analyst, Sanyam Chaurasia, notes Apple’s success in offering high-end models, with shipments of the iPhone 16 Pro and Pro Max surpassing previous models. This premiumization trend is mirrored in the second-user market, where customers seek top-tier devices, aided by accessible credit options.
Consumer preferences in the secondary market are driven by factors like price, battery life, and device longevity. Samsung Electronics America’s Craig Feely emphasizes consumers’ interest in affordable options and products designed for easy repair and recycling. B-Stock’s Joe Dube highlights the growth potential in the second-user market, indicating that only about 30% of devices sold end up in the secondary market, leaving ample room for expansion.
Apple’s strategic positioning in the smartphone sales landscape has witnessed a shift towards direct consumer engagement. Increasingly, consumers are choosing to purchase new devices directly from Apple or Samsung rather than through carriers. This trend extends to the secondary market, where manufacturer trade-ins are preferred over carrier options. For Apple, this shift presents an opportunity to acquire older devices through trade-ins, refurbish them, and resell them through their own outlets or partners, effectively monetizing the same device twice.
The benefits of second-user smartphone sales for Apple are multifaceted. Not only does the second-user market widen Apple’s customer base, but it also serves as a gateway to introduce more users to its ecosystem of high-margin services. By repurposing older iPhones through trade-ins, Apple creates an additional revenue stream while fostering customer loyalty and ecosystem retention. The satisfaction derived from Apple’s devices often translates into long-term customer loyalty, ensuring continued engagement with the brand.
In conclusion, the thriving second-user smartphone market represents a lucrative opportunity for Apple to diversify its revenue streams, attract new customers, and foster long-term loyalty. By capitalizing on the trend towards refurbished and pre-owned devices, Apple can strategically position itself for sustained growth and consumer engagement in the ever-evolving tech industry landscape.