High phone prices driving consumers to the used phone market

Smartphone prices topping $1,000 from Apple and Samsung helped drive the growth of the used phone market in 2020 as consumers decided phones with older features were good enough for them.

"I think a lot of people had an epiphany when smartphones hit the $1,000 mark," said Consumer Reports technology writer Bree Fowler. A four-digit price tag "can really make you reassess whether you need something or not."

The economic hardship brought by the COVID-19 pandemic has also steered people to the used phone market. In the United States, the pandemic has led to business closures and a 6.7% unemployment rate, nearly twice the pre-pandemic number. A December Bankrate survey indicates that only 39% of Americans could comfortably pay an unexpected $1,000 bill.

People who decided used smartphones were sufficient contributed to a 9.2% increase in global shipments last year to 225.4 million units, according to IDC's latest report. By 2024, the number of shipments will reach 351.6 million units. Meanwhile, new phone shipments fell by 6.4% in 2020.

Besides turning to secondhand devices, more people buy mid- to lower-market phones, like the Google Pixel, iPhone SE and Samsung's Galaxy A series. Others are holding on to their old phones longer.

"[People] just want a device that will make and receive calls, take decent snapshots and let them check their email and social media accounts," Fowler said. "You don't need to spend $1,000 to get that."

IDC research manager Anthony Scarsella said buyers could return to the new phone market if manufacturers introduce innovative products at more reasonable prices. Today's 5G phones in the $400 range are an example. Smartphones with new foldable screens could also attract consumers if current prices were much lower.

While not for the average buyer, high-end smartphones will likely generate sufficient revenue from people of means who use their phones as status symbols, said Boston University business professor Jay Zagorsky.

People buy expensive phones with advanced features they'll never use for the same reason they buy pricey cars that can reach speeds of 200 mph, Zagorsky said. "The new iPhone and new Samsung foldable phones are a simple visual method of telling friends, family and acquaintances that you can buy a phone that costs over $1,000."

Mike Gleason is a reporter covering end-user computing topics such as desktop management. He previously covered communities in the MetroWest region of Massachusetts for the Milford Daily News, Walpole Times, Sharon Advocate and The Medfield Press. He has also worked for newspapers in central Massachusetts and southwestern Vermont and served as a local editor for Patch. He can be found on Twitter at @MGleason_TT.