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Mobile Trends

Will Poor Trade-in Deals Kill The $2,000+ Smartphone?

It’s a well-known fact, the moment you
drive a brand new vehicle off of a sales lot, it loses value. Experts will tell
you that within 30 days of taking ownership of your new car it will have probably
lost around 10 percent of its value and will typically lose between 50 and 60
percent over a three year period. But this is nothing on the value you lose on
your smartphone within a couple of weeks of unboxing the device.

Because purchasing a car is most likely the
second most expensive thing (next to a home) you might buy in your lifetime, we
are right to worry about the resale value of a vehicle. Very few people have
the financial clout to be able to right-off the total cost of a car after a few
years and, quite rightly, will want to leverage its value when it comes to
buying a new one.

A car, after all, isn’t like that old
smartphone you’ve got stuffed at the back of a drawer (I’ve actually got a
drawer full of them). Economically, when compared to a car, a smartphone is
fairly disposable (although we’d prefer if you recycled them). However,
smartphones are creeping up in price and top-end models, while still not quite
in the same league as a car, are still very much a considered purchase.

Status
Symbols

There can be little doubt that, for many
people, the smartphone in their pocket is as much a status symbol as the car
parked outside their house.

However, it didn’t seem too long along that we were looking at $1,000 smartphones and wondering how much further manufacturers could push-up the value. But in recent months we’ve seen announcements around devices like the Galaxy Fold and the Huawei Mate X tipping the scales with at $1,980 and a staggering $2,299 respectively.

$2,000 is a lot of money to spend on
anything and most people will want to know that their device holds its value
over its lifetime.

Unfortunately, the news isn’t good. In
fact, when you consider how quickly a smartphone loses its value, buying a car
suddenly looks like a good investment.

Smartphone
Depreciation

According to the trade-in comparison site BankMyCell smartphones
can depreciate at a staggering level.

The site highlights figures that suggest a
Samsung Galaxy S9 smartphone released in March 2018 for $720, lost 60 percent
of its value in just nine months. Much of this depreciation (nearly 42 percent)
occurs after just one month.

This essentially means, after only 30 days
that $720 device is now only worth around $418.

OK, a $400+ loss is bad enough – but if,
for example, the Huawei Mate X depreciation followed a similar pattern, you
could expect to wave goodbye to a cool $965 in the first month of ownership.

The difficult thing to consider when buying
technology is the knowledge that within as little as twelve months your top-end
device will be outpaced by more mid-range models. So is buying a top-end model
ever a good idea?

It’s also worth considering that an
unproven (or, at least, untested by the general public) technology like a
foldable device is an unknown quantity. If, after a couple of months, the fold
begins to fail, the resale value will undoubtedly plummet.

With this in mind, savvy smartphone buys
might wish to wait a couple of months before investing in any cutting edge
tech.

No
More Devices Left in the Back of the Drawer

One thing is for sure, as smartphone costs
continue to rise, buyers will become more aware of the resale value. This is
particularly true because many of the people who buy top-end devices will want
to be seen to remain at the cutting edge and therefore won’t keep hold of their
devices for too long.

The question is, how many sales cycles will
it take before top-end device buyers feel a little jaded by such heavy
depreciation and will this force device manufacturers to reconsider their
pricing strategies?

Note:
The research and development that goes into
creating cutting edge devices costs a lot of money – but this doesn’t mean that
new devices have to be extortionately priced. High prices are often a business and
marketing decision and can be adjusted by economies of scale – and remember
these devices sell in millions. It’s also worth remembering, aside from sales
there are other strategies device manufacturers can look at to monetize their products.
Hint: Digital Turbine can help with
this with.

New
or New to You

Whether the potentially rapid depreciation of
$2,000+ smartphone will impact on sales remains to be seen. However, we can
expect to see high prices focus people’s minds on how they acquire their
devices. Will they buy new, or wait a couple of months for a mid-range
alternative, or look for the big brand devices on the second-hand market?

Reaching
Smartphone Owners in a Disjointed Marketplace

Regardless of how people buy their smartphones,
Digital Turbine can help app developers position their apps in front of the
right people at the right time. Whether it’s a brand new top-end device or a
second-hand smartphone – we have you covered. To learn more, talk to one of our
pre-loading experts today.

Marissa Camilli

By Marissa Delisle

Marketing Specialist

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