Are Refurbished Smartphones Cause for Concern?
ABI Research forecasts global handset sales will increase by 4.9% in 2016.
ABI Research forecasts global handset sales, including both smartphones and mobile phones, will increase by 4.9% in 2016. One key trend that could create concern among smartphone vendors is the growing refurbished market, which will push OEMs to reconsider their branding options and portfolio as a whole.
“We anticipate the refurbished market to grow significantly over the next five years, particularly as it starts to encompass devices with advanced feature sets and 4G connectivity,” said David McQueen, research director. “The spike in the refurbished market will cause a ripple effect, enabling companies like Apple to drive down pricing in their product portfolios without resorting to pushing through the next new, lost-cost product launch. This will be particularly useful for companies targeting emerging markets in the years ahead to help both expand their brand reach and addressable market.”
The Asia-Pacific region will continue to drive overall industry growth, projected to account for more than 50% of sales through to 2020. ABI Research data suggests that Africa will show the greatest growth rate over the next five years, while also becoming the second largest handset shipment region from 2016. Regardless of region, all current market leaders will need to take necessary, forward-thinking measures in the years ahead if they wish to retain healthy margins and stay on top in a market that is becoming increasingly commoditized and is clearly reaching saturation despite the billions of new handsets being sold each year.
Samsung, specifically, remains the global market’s leading smartphone and handset vendor. While its expansive device portfolio allows it to claim stake to a larger addressable market, its device range is also putting pressure on the company’s margins. ABI Research suggests this to be the main reason behind the company’s decision to scale back on the sale of old models and provide an improved mix of new launches to increase the blended average selling price in 2016.
“Apple and Samsung are very successful in maintaining margins so far, but many others are beginning to fall by the wayside, notably, Blackberry, HTC, and Sony,” said McQueen. “It will be those that can control costs, create quick and sustainable differentiation, and establish new business models—such as those being touted by Xiaomi and Jolla—that will remain competitive and resilient to the expected ongoing market pressures. Support for reverse channel business models that embrace the refurbished market will be an important part of that mix.”
For more information, visit www.abiresearch.com.