It’s a well-known fact, the moment youdrive a brand new vehicle off of a sales lot, it loses value. Experts will tellyou that within 30 days of taking ownership of your new car it will have probablylost around 10 percent of its value and will typically lose between 50 and 60percent over a three year period. But this is nothing on the value you lose onyour smartphone within a couple of weeks of unboxing the device.
Because purchasing a car is most likely thesecond most expensive thing (next to a home) you might buy in your lifetime, weare right to worry about the resale value of a vehicle. Very few people havethe financial clout to be able to right-off the total cost of a car after a fewyears and, quite rightly, will want to leverage its value when it comes tobuying a new one.
A car, after all, isn't like that oldsmartphone you've got stuffed at the back of a drawer (I've actually got adrawer full of them). Economically, when compared to a car, a smartphone isfairly disposable (although we’d prefer if you recycled them). However,smartphones are creeping up in price and top-end models, while still not quitein the same league as a car, are still very much a considered purchase.
StatusSymbols
There can be little doubt that, for manypeople, the smartphone in their pocket is as much a status symbol as the carparked 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 onanything and most people will want to know that their device holds its valueover its lifetime.
Unfortunately, the news isn’t good. Infact, when you consider how quickly a smartphone loses its value, buying a carsuddenly looks like a good investment.
SmartphoneDepreciation
According to the trade-in comparison site BankMyCell smartphonescan depreciate at a staggering level.
The site highlights figures that suggest aSamsung Galaxy S9 smartphone released in March 2018 for $720, lost 60 percentof its value in just nine months. Much of this depreciation (nearly 42 percent)occurs after just one month.
This essentially means, after only 30 daysthat $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, youcould expect to wave goodbye to a cool $965 in the first month of ownership.
The difficult thing to consider when buyingtechnology is the knowledge that within as little as twelve months your top-enddevice will be outpaced by more mid-range models. So is buying a top-end modelever a good idea?
It's also worth considering that anunproven (or, at least, untested by the general public) technology like afoldable device is an unknown quantity. If, after a couple of months, the foldbegins to fail, the resale value will undoubtedly plummet.
With this in mind, savvy smartphone buysmight wish to wait a couple of months before investing in any cutting edgetech.
NoMore Devices Left in the Back of the Drawer
One thing is for sure, as smartphone costscontinue to rise, buyers will become more aware of the resale value. This isparticularly true because many of the people who buy top-end devices will wantto be seen to remain at the cutting edge and therefore won’t keep hold of theirdevices for too long.
The question is, how many sales cycles willit take before top-end device buyers feel a little jaded by such heavydepreciation and will this force device manufacturers to reconsider theirpricing strategies?
Note:The research and development that goes intocreating cutting edge devices costs a lot of money – but this doesn’t mean thatnew devices have to be extortionately priced. High prices are often a business andmarketing decision and can be adjusted by economies of scale – and rememberthese devices sell in millions. It’s also worth remembering, aside from salesthere are other strategies device manufacturers can look at to monetize their products.Hint: Digital Turbine can help withthis with.
Newor New to You
Whether the potentially rapid depreciation of$2,000+ smartphone will impact on sales remains to be seen. However, we canexpect to see high prices focus people’s minds on how they acquire theirdevices. Will they buy new, or wait a couple of months for a mid-rangealternative, or look for the big brand devices on the second-hand market?
ReachingSmartphone Owners in a Disjointed Marketplace
Regardless of how people buy their smartphones,Digital Turbine can help app developers position their apps in front of theright people at the right time. Whether it’s a brand new top-end device or asecond-hand smartphone – we have you covered. To learn more, talk to one of ourpre-loading experts today.
