12 ms·

Your Phone Loses Value Pretty Fast (Unless It's an iPhone)

78 points by omarish 15y ago

midas 15y ago
It's pretty amazing that we pay ~$90 a month to Verizon but only ~$13 a month to Apple. Intuitively it feels that Apple is the one creating most of the value.
- jonknee 15y ago
  You're aware that Verizon is also paying Apple right? The $200 you paid for your iPhone turns into $600 for Apple.
  - midas 15y ago
    The post looks at the no-contract prices, so it assumes you paid ~$600 for the phone and then sold it for ~$300 18 months later.
- pragmatic 15y ago
  Look at Verizon's profit vs Apple's. http://www.bloomberg.com/news/2012-01-24/verizon-posts-loss-on-pension-costs-as-rising-iphone-sales-boost-expenses.html http://www.bloomberg.com/news/2012-01-24/verizon-posts-loss-... > Verizon and rivals such as AT&T Inc. sell the Apple Inc. (AAPL) iPhone and other smartphones at a loss as they compete to get customers to sign up for contracts that typically run for two years. Verizon et al, run a 24x7 data/voice nationwide network. That involves constant physical construction and capital investment. Apple is the clear winner, selling their product at a premium with the middle man subsidizing the consumer's purchase price.
- rythie 15y ago
  Putting up 1,000s of cell phone towers isn't exactly cheap and it's not like you can get it done in another country because it has to be done in your home country.
Terretta 15y ago
Nice job leaving the rest of the headline off. I've sold each model iPhone to date for more than I paid for it, even when paying full (unlocked) rate. Apparently people consider there to be significant value in a no contract phone.
- omarish 15y ago
  Absolutely. A lot of those no-contract phones end up going abroad, where people are willing to pay heavy premiums for the latest and greatest.
  - joering2 15y ago
    he probably sold the previous version (to get the newer one).
    - Terretta 15y ago
      Yes, I was selling prior versions. But also yes, they went usually to Puerto Rico or Russia.
aquinn 15y ago
Unsurprising since phones are ditched by carriers after they're sold (orphaned android user).
- hollerith 15y ago
  Is your android phone that got ditched locked -- and the carrier would not unlock it even after ditching it?
  - aquinn 15y ago
    There's newer firmware updates but they won't release them. Perhaps other carriers have newer updates for my phone but i'm on a contract.
drcube 15y ago
The lesson here is to buy used phones outright for cheap and hasten the decline of carrier lock-in. That's what I got out of the article at least. The difference in depreciation between iphones and androud seemed pretty small to me, and probably represents the overall inflated price of the half-eaten fruit logo. I see laptops on craigslist with similar specs: $2000 for Mac and ~$500 for Dell. Like Billy Beane, I buy cheap and undervalued.
- tomerico 15y ago
  I have got the exact opposite lesson: a 1 year old iPhone has lost 25% of its value, and it loses another 25% of the original value the next year. So you lose the same amount with an older phone In other words - imagine a rich person buying a new iPhone every year and selling the old one to his poor friend. Both of them eventually pay the same amount for the phone, but the poor friend got a used one.
  - InclinedPlane 15y ago
    I think you might be misreading the graphs. According to the article a 1 year old iPhone depreciates by about 40%, and a 2 year old iPhone depreciates by around 65-70%. Thus, a person selling their 1 year old iPhone would fail to recoup 40% of the sticker price overall while someone buying 1 year old phones and selling them a year later would fail to recoup all but 25% of the sticker price, give or take.
  - cshesse 15y ago
    You seem to be right, but I think you mean 6 months instead of 1 year, from looking at the chart provided.
pragmatic 15y ago
One explanation: The rapid rate of change in Android phones vs Iphones? Consider if a car company released 4 model updates per year instead of one. Your Hyandai 2013 Quarter 1 would depreciate faster as the 3 newer models came out (granted that each new model would have more/better features - heated seats, leather, auto drive, whatever). So as an iPhone buyer/owner, you know your phone will be state of the art for foreseeable future, where as with Android, you phone will be (perceived anyway) as antiquated, much more rapidly.
- ConstantineXVI 15y ago
  This has been a problem in the (US) wireless industry for a very long time, long before Android. OEMs have always been more than happy to make 4 variations of the same phone for 4 carriers with 4 different names; putting Android on everything simply makes the problem that much more obvious. HTC was the worst offender for a time, even forgoing their own branding for the carrier's. It'd help the situation much if OEMs simply made ~4 models (not counting radio configs) every year, and stuck with them across carriers. Moto, for instance, would have: * RAZR (flagship) * Milestone Pro (keyboard) * Milestone X (mid-range) * Defy ("free" phone) on every carrier, and that would be that.
- sounds 15y ago
  Can you explain how it's different than 4 car companies releasing once a year? Android's plunging prices are not really a depreciation of the hardware value, but rather an indication of the rapid pace of the software - well, I'm ignoring fragmentation for the sake of argument. Like you said, "antiquated, much more rapidly," but not by specs - by software features. Example: Ice Cream Sandwich is slowly becoming available. The iPhone lives off in its little garden - I agree that "you know your phone will be state of the art for foreseeable future." Apple strives to maintain vertical integration, so their software moves slowly. It's lock-stepping with their hardware. Hardware innovation generally moves at a steady, predictable pace. Why does it matter that Android's value is more closely tied to the software? That's Google's area of expertise. They've tried to make the hardware a commodity. If it doesn't end up fragmenting so badly consumers start leaving (and I don't think they will) -- then the hardware will not garner the big margins. The software will (under Google's control, hopefully monetizable by them). Software innovation can be more volatile, but especially for mobile phones it can be what sets you apart. Arguably, Apple has the software edge - hence, Android's furious pace.
mladenkovacevic 15y ago
Disagree with "A high resale value is the market telling you, 'this is a good car.'" A high re-sale value is the market telling you this is a well-regarded car brand. The car itself could be the biggest lemon on the lot.
- mladenkovacevic 15y ago
  also this line "Never trust anyone under 30 with a BlackBerry.” So now we're supposed to judge something as complex as a person's trustworthiness based on their consumerist choices? I understand it's meant to be taken as an offbeat joke but as humorous as it's meant to be, statements like that make me feel troubled and mildly depressed. I'd really not like people to define me based on what phone I have :( Let's just have a beer and talk instead :\
  - clorex 15y ago
    I don't really understand that quote. Will someone explain?
yread 15y ago
i think that variance is pretty crucial in this case. With iphones you always have a high end device whereas the quality of android phones differ greatly. i would still expect iphone to come out the best but still a comparison to samsung galaxies would make more sense
- enjo 15y ago
  Just sold my hacked droid Incredible (the original) for $400 fwiw.
  - ConstantineXVI 15y ago
    You got lucky with a seriously naive buyer. Going by VZ's listed (usually inflated) price, the Incredible 2[1] goes for $430 brand new; so your buyer either thought your hacking was worth the $200 (at least) premium or just failed to do research. [1] http://www.verizonwireless.com/b2c/store/controller?item=phoneFirst&action=viewPhoneDetail&selectedPhoneId=5641 http://www.verizonwireless.com/b2c/store/controller?item=pho...
  - midas 15y ago
    Priceonomics has great data on that as well (median price = $150): http://priceonomics.com/phones/htc/droid-incredible/ http://priceonomics.com/phones/htc/droid-incredible/
functionform 15y ago
"Our data suggests that buying an iPhone is a better economic decision" Wow, what a leap. Is the author aware the purchasing a phone for resale value is actually NOT the main reason to purchase a smartphone? Any article that starts by quoting MG Siegler should immediately be discounted anyway.
- jcitme 15y ago
  To be fair the followed it right up with a critical quote, but I agree.
hollerith 15y ago
I would hesitate to buy a used phone because these things like phones and computer keyboards and mice that people constantly handle have the highest level of germs, and getting germs and grease and stuff out of the various nooks and crannies without damaging the electronics looks hard.
- henrikschroder 15y ago
  That's an insane reason. Just by being in the same room as other people you expose yourself to more germs than you would by touching a used and cleaned phone.
  - hollerith 15y ago
    I have seen news reports of studies done by public-health researchers who worry about computer keyboards and phones after measurements showed surprisingly high numbers germs on these items. It might be that the researchers were worried only about germs that can survive for only a few days or cannot survive the type of cleaning achievable without completely disassembling the phone, but it is not obvious to me that that is the case. For example, one hears about these biofilms that allow germs to survive for very long times. What are your reasons for believing that just being in the same room as other people exposes a person to more germs?
mrfu 15y ago
"At Priceonomics, we firmly believe that resale value is the best objective indicator of product quality." I may have missed something, but given that prices are supposed to reflect the supply vs demand ratio (in a sane market), how can they end up "firmly" believing that resale value is an objective indicator for quality ?
- jrockway 15y ago
  Because they like Apple and have some "data" that shows Apple is better. The only missing piece is how that data makes Apple better, and that's what this statement is for.
- dpcx 15y ago
  For the same reason that having only one car available won't make people pay exorbitant sums of money for it. People pay what they perceive the item is worth, typically based on quality. Sure, some people will always buy the cheapest car (or phone), but most people want a phone that will last. They'll pay a little more for a car/phone that will last longer.
sp332 15y ago
I have an EVO 4G from Sprint. It's less than 2 years old (still on the original contract) but it's been EOL'd by Sprint. What's funny is that you can still buy it from them, get a new contract for 2 years starting from now, but they've already guaranteed that there will be no updates for it anymore.
deepkut 15y ago
This is an incredibly interesting article though I would urge you to include some methodology. With some proper evidence behind these bold statements, you'd be making headlines at TechCrunch (you still might anyways)! Great read, I'm now interested in your business.
cuu508 15y ago
"At Priceonomics, we firmly believe that resale value is the best objective indicator of product quality." I'd say it indicates the speed of improvement--whether quality has topped out, or is still improving. Resale value for a hammer in a year migh be close to 100% of its original value. It might be used and scratched, but it still works as new, and there aren't any new revolutionary hammers out on market. Same with DSLR lenses, for example. Top end MTB bikes are of very high quality, a joy to ride. But they depreciate sometimes by 50% in a year: new models are out, lighter, stronger, better-handling and everyone wants to upgrade.
- raganwald 15y ago
  Top end MTB bikes are of very high quality, a joy to ride. But they depreciate sometimes by 50% in a year: new models are out, lighter, stronger, better-handling and everyone wants to upgrade. be careful. Some high-end MTB brands depreciate more than others, which is the exact point this article is promoting about phones.
  - cuu508 15y ago
    And I'm saying it might be not because of difference in immediate quality, but because some brands have found their working formula and slowed down experimenting, while others continue cranking out new stuff. Brooks saddles look the same, act the same and cost the same now as 20 years ago. A saddle that has been sitting in warehouse for 5 years would probably have about the same market value as saddle made this year. I'm no Brooks expert but that's the impression I get. Shimano on the other hand updates its component groups each year. Their products are highly evolved already, but still they find things to improve. So people upgrade.
hackoder 15y ago
The thing with lumping all 'Android' together is that it gives the wrong picture. Similar to lumping all PCs. When you buy anything non-Apple, you have to be a smart buyer. This can be good or bad, depending on your world view. If you compare premium non-Apple brands, they compare favoribly to Apple. For example, my Nexus S was $300 off contract (brand new). This is much cheaper than the comparable iPhone 4 at that time, retains good resale value, and will probably be fast enough/supported for as long as the iPhone 4. On the PC side, ThinkPad T/X series offers similar (or even better!) reliability/cost effectiveness/resale value to MacBooks. For example, the x220 series configured new at lenovo will cost ~1000. Current resale puts it at around 800, which is better than the MBP (for e.g. base at $1249, refurb @ apple for $1049, and resale at around $950).
- sjs 15y ago
  Even if you break out Samsung, Motorola, HTC, etc. you will still have the same problem within each manufacturer's lineup. Comparing individual phone models is logical but nobody does it for some reason. It seems that people always want to compare the iPhone (a single hardware line) to Android (software) which is just bizarre.
  - alsocasey 15y ago
    Resale value is also being measured as a percentage MSRP, which makes sense for the iPhone, as it isn't really available for anything but MSRP, but isn't as realistic for most Android phones that can often be had for less than MSRP.
    - schraeds 15y ago
      So Android phones lose value just sitting on the shelf.
  - mechanical_fish 15y ago
    Problematic it may be, but I wouldn't call it "bizarre". The fact that the iPhone has a single line of hardware evolution, a single line of software evolution, and an extremely straightforward product line at any given time is a very deliberate branding and marketing decision by Apple, aimed at avoiding exactly the situation we see in the rest of the phone market: The marketplace is a confusing zoo in which the available mix of models changes every five minutes and nobody knows what they're buying unless they have the data sheet sitting open in front of them.
Gormo 15y ago
> At Priceonomics, we firmly believe that resale value is the best objective indicator of product quality. Really? It might be a decent indicator of product quality relative to other products on the market, but even then, plenty of extrinsic factors - from speculative bubbles to the lack of knowledge of longer-term product quality - can influence the perceptions of relative value that drive market prices. That aside, how indicative of the overall market for phones is the specific segment of those who buy second-hand phones? Unlike houses or cars, few people actually buy used phones, and those who buy new phones aren't usually thinking about resale price at their initial time of purchase. Does resale price really say a lot about the underlying product quality of a mobile phone?
- thedufer 15y ago
  High resale value seems like it would correlate most strongly with high initial cost and high popularity - more people would prefer to buy a used one if the initial cost is higher since they can't afford the initial cost, so both increase the demand. Android/Blackberry popularity is spread over many more models than the iPhone, and are usually cheaper. "We firmly believe", on the other hand, is not an indicator of anything. "We've defined quality in such a way that" would be more apt - quality is a hard-to-define term, and they don't even try.
cheez 15y ago
Who cares?
GernBlanston 15y ago
More fodder for discussion here: http://allthingsd.com/20120117/secondary-iphone-market-a-boon-for-att-verizon-and-apple-too/ http://allthingsd.com/20120117/secondary-iphone-market-a-boo... Turns out that the secondary market for the iPhone is nearly as robust as the primary market. And it’s growing steadily larger and more important for Apple’s carrier partners, and for Apple itself.
LVB 15y ago
It's an interesting analysis, but I don't see how the results would affect my buying decision at all. What's the actual dollar amount difference in reselling an iPhone for 53% of original price vs Android at 42%? Maybe $50-$80? How much in carrier fees have I spent over that 18 months? Well over $1000. The difference in resale value versus the entire expense of owning these phones is insignificant. Or at least it's not significant enough to outweigh the preference one might have for a given phone. What if the numbers were flipped? How many iPhone owners would choose to switch to Android if they knew they could save $70 over the next year and a half?
- freehunter 15y ago
  I always hate the argument that phone costs don't matter because carrier costs are so high. You have to pay the carrier cost anyway. Service is a fixed cost, the phone is the variable cost. The only time carrier costs should be added into the equation is when you have to buy an "iPhone" plan that costs more or less than the comparable "smartphone" plan. If your choice of smartphone doesn't change the cost paid to the carrier over the term of a contract, the data point is useless.
- vacri 15y ago
  They lost me with this: Skip those extra GBs on your iPhone. An additional 8GB of hard drive costs you an extra $100 upfront but only adds $10 to the resale value of your phone. The secondary market doesn't value extra hard drive space on an iPhone, so get the one with the smallest amount of disk space. Hey fellas - there is more to a phone than resale value. If you're only thinking about how much you can sell it for at the end of possession, then I think I'll give your review a skip.
  - LVB 15y ago
    I found their opening quotes to be a bit at odds with the rest of their logic: "It's probably hard for a Mercedes owner to describe to a Honda owner how attention to detail makes their driving experience better." Right, and said Mercedes owner probably isn't going to buy a Honda next time just because it holds its resale value better.
jakeonthemove 15y ago
I stopped reselling my electronics and just give them away to whomever needs them - somehow, that's less depressing than knowing I bought something for $500 and now I sell it for $100 (and my stuff looks like new even after years of use). Buying used smartphones, on the other hand, is great - you can get a G2X or a Dell Venue Pro (excellent Windows 7 phone) for under $300 easily, and it will work just as well as any other phone (especially the G2X with a custom ROM)...
dodedo 15y ago
I realize this isn't quite the point of the article, but I have a $29.99 Nokia phone I've been using for years and I'm pretty sure I can resell it for at least $20. Non-smart phones hold their value best of all.
- moylan 15y ago
  some are even worth more than they were origianally. http://www.itp.net/553344-hackers-pay-top-dollar-for-old-nokia-1100-handsets http://www.itp.net/553344-hackers-pay-top-dollar-for-old-nok... i've found that nokias sell well second hand. i wouldn't recommend an iphone second hand as they are much more fragile than old solid nokias. i've seen a number of iphones that the mic or wifi no longer works on and knowing the users i don't think they abused the devices that much.
gardarh 15y ago
Look at the "Crackberry Index" chart. Does anyone else get the feeling they have too few datapoints to reach any meaningful conclusion?
bambax 15y ago
Quoting Shakespeare at the end of the post sounds a little forced.
andrewrawr 15y ago
The iphone is an ipod touch on the secondary market. But a used Android phone looks pretty much useless to most people, especially when you can get a new phone for free or cheap. The Google Galaxy Nexus is now $99 on Amazon Wireless -- quite a bit cheaper than any comparable iphone. It's interesting that we used to throw away cell phones but now they have value.
teyc 15y ago
Percentages themselves do not tell the whole story. Better to use the total cost of ownership. A $1000 phone that loses 35% of its value ($350) compared to a $500 phone that loses 50% of its value ($250) can put things into perspective.
- HackR 15y ago
  This needs to be taken into account, thanks for bringing this up, didn't think about it!
quaker 15y ago
No doubt there is a robust resale market for iPhones, but if I'm not mistaken, this article fails to take into account initial subsidized market prices when making it's lifetime value calculations. Yes, iPhones are subsidized too, but not completely; whereas most Android phones are not subject to the same price-fixing policies, and can be purchased via authorized Verizon, AT&T, Sprint, or T-Mobile resellers at significant discounts. In fact, 90% of Android phones -- even those with unsubsidized price tags of $500 -- can be purchased for FREE (or sometimes $.01) with a contract from a carrier-authorized retailer such as Amazon or Wirefly. So yes, if you walk into the Verizon store and pay $200 for a Droid 3, your lifetime cost may end up being higher than an iPhone. But if you have a brain, and get your Droid 3 from an authorized Verizon dealer, you pay $0 for the exact same product, and the math shifts rather quickly.

78 points by omarish 15y ago

midas 15y ago

It's pretty amazing that we pay ~$90 a month to Verizon but only ~$13 a month to Apple. Intuitively it feels that Apple is the one creating most of the value.

jonknee 15y ago
You're aware that Verizon is also paying Apple right? The $200 you paid for your iPhone turns into $600 for Apple.
- midas 15y ago
  The post looks at the no-contract prices, so it assumes you paid ~$600 for the phone and then sold it for ~$300 18 months later.
pragmatic 15y ago
Look at Verizon's profit vs Apple's. http://www.bloomberg.com/news/2012-01-24/verizon-posts-loss-on-pension-costs-as-rising-iphone-sales-boost-expenses.html http://www.bloomberg.com/news/2012-01-24/verizon-posts-loss-... > Verizon and rivals such as AT&T Inc. sell the Apple Inc. (AAPL) iPhone and other smartphones at a loss as they compete to get customers to sign up for contracts that typically run for two years. Verizon et al, run a 24x7 data/voice nationwide network. That involves constant physical construction and capital investment. Apple is the clear winner, selling their product at a premium with the middle man subsidizing the consumer's purchase price.
rythie 15y ago
Putting up 1,000s of cell phone towers isn't exactly cheap and it's not like you can get it done in another country because it has to be done in your home country.

Terretta 15y ago

Nice job leaving the rest of the headline off. I've sold each model iPhone to date for more than I paid for it, even when paying full (unlocked) rate. Apparently people consider there to be significant value in a no contract phone.

omarish 15y ago
Absolutely. A lot of those no-contract phones end up going abroad, where people are willing to pay heavy premiums for the latest and greatest.
- joering2 15y ago
  he probably sold the previous version (to get the newer one).
  - Terretta 15y ago
    Yes, I was selling prior versions. But also yes, they went usually to Puerto Rico or Russia.

aquinn 15y ago

Unsurprising since phones are ditched by carriers after they're sold (orphaned android user).

hollerith 15y ago
Is your android phone that got ditched locked -- and the carrier would not unlock it even after ditching it?
- aquinn 15y ago
  There's newer firmware updates but they won't release them. Perhaps other carriers have newer updates for my phone but i'm on a contract.

drcube 15y ago

The lesson here is to buy used phones outright for cheap and hasten the decline of carrier lock-in. That's what I got out of the article at least. The difference in depreciation between iphones and androud seemed pretty small to me, and probably represents the overall inflated price of the half-eaten fruit logo. I see laptops on craigslist with similar specs: $2000 for Mac and ~$500 for Dell. Like Billy Beane, I buy cheap and undervalued.

tomerico 15y ago
I have got the exact opposite lesson: a 1 year old iPhone has lost 25% of its value, and it loses another 25% of the original value the next year. So you lose the same amount with an older phone In other words - imagine a rich person buying a new iPhone every year and selling the old one to his poor friend. Both of them eventually pay the same amount for the phone, but the poor friend got a used one.
- InclinedPlane 15y ago
  I think you might be misreading the graphs. According to the article a 1 year old iPhone depreciates by about 40%, and a 2 year old iPhone depreciates by around 65-70%. Thus, a person selling their 1 year old iPhone would fail to recoup 40% of the sticker price overall while someone buying 1 year old phones and selling them a year later would fail to recoup all but 25% of the sticker price, give or take.
- cshesse 15y ago
  You seem to be right, but I think you mean 6 months instead of 1 year, from looking at the chart provided.

pragmatic 15y ago

One explanation: The rapid rate of change in Android phones vs Iphones? Consider if a car company released 4 model updates per year instead of one. Your Hyandai 2013 Quarter 1 would depreciate faster as the 3 newer models came out (granted that each new model would have more/better features - heated seats, leather, auto drive, whatever). So as an iPhone buyer/owner, you know your phone will be state of the art for foreseeable future, where as with Android, you phone will be (perceived anyway) as antiquated, much more rapidly.

ConstantineXVI 15y ago
This has been a problem in the (US) wireless industry for a very long time, long before Android. OEMs have always been more than happy to make 4 variations of the same phone for 4 carriers with 4 different names; putting Android on everything simply makes the problem that much more obvious. HTC was the worst offender for a time, even forgoing their own branding for the carrier's. It'd help the situation much if OEMs simply made ~4 models (not counting radio configs) every year, and stuck with them across carriers. Moto, for instance, would have: * RAZR (flagship) * Milestone Pro (keyboard) * Milestone X (mid-range) * Defy ("free" phone) on every carrier, and that would be that.
sounds 15y ago
Can you explain how it's different than 4 car companies releasing once a year? Android's plunging prices are not really a depreciation of the hardware value, but rather an indication of the rapid pace of the software - well, I'm ignoring fragmentation for the sake of argument. Like you said, "antiquated, much more rapidly," but not by specs - by software features. Example: Ice Cream Sandwich is slowly becoming available. The iPhone lives off in its little garden - I agree that "you know your phone will be state of the art for foreseeable future." Apple strives to maintain vertical integration, so their software moves slowly. It's lock-stepping with their hardware. Hardware innovation generally moves at a steady, predictable pace. Why does it matter that Android's value is more closely tied to the software? That's Google's area of expertise. They've tried to make the hardware a commodity. If it doesn't end up fragmenting so badly consumers start leaving (and I don't think they will) -- then the hardware will not garner the big margins. The software will (under Google's control, hopefully monetizable by them). Software innovation can be more volatile, but especially for mobile phones it can be what sets you apart. Arguably, Apple has the software edge - hence, Android's furious pace.

mladenkovacevic 15y ago

Disagree with "A high resale value is the market telling you, 'this is a good car.'" A high re-sale value is the market telling you this is a well-regarded car brand. The car itself could be the biggest lemon on the lot.

mladenkovacevic 15y ago
also this line "Never trust anyone under 30 with a BlackBerry.” So now we're supposed to judge something as complex as a person's trustworthiness based on their consumerist choices? I understand it's meant to be taken as an offbeat joke but as humorous as it's meant to be, statements like that make me feel troubled and mildly depressed. I'd really not like people to define me based on what phone I have :( Let's just have a beer and talk instead :\
- clorex 15y ago
  I don't really understand that quote. Will someone explain?

yread 15y ago

i think that variance is pretty crucial in this case. With iphones you always have a high end device whereas the quality of android phones differ greatly. i would still expect iphone to come out the best but still a comparison to samsung galaxies would make more sense

enjo 15y ago
Just sold my hacked droid Incredible (the original) for $400 fwiw.
- ConstantineXVI 15y ago
  You got lucky with a seriously naive buyer. Going by VZ's listed (usually inflated) price, the Incredible 2[1] goes for $430 brand new; so your buyer either thought your hacking was worth the $200 (at least) premium or just failed to do research. [1] http://www.verizonwireless.com/b2c/store/controller?item=phoneFirst&action=viewPhoneDetail&selectedPhoneId=5641 http://www.verizonwireless.com/b2c/store/controller?item=pho...
- midas 15y ago
  Priceonomics has great data on that as well (median price = $150): http://priceonomics.com/phones/htc/droid-incredible/ http://priceonomics.com/phones/htc/droid-incredible/

functionform 15y ago

"Our data suggests that buying an iPhone is a better economic decision" Wow, what a leap. Is the author aware the purchasing a phone for resale value is actually NOT the main reason to purchase a smartphone? Any article that starts by quoting MG Siegler should immediately be discounted anyway.

jcitme 15y ago
To be fair the followed it right up with a critical quote, but I agree.

hollerith 15y ago

I would hesitate to buy a used phone because these things like phones and computer keyboards and mice that people constantly handle have the highest level of germs, and getting germs and grease and stuff out of the various nooks and crannies without damaging the electronics looks hard.

henrikschroder 15y ago
That's an insane reason. Just by being in the same room as other people you expose yourself to more germs than you would by touching a used and cleaned phone.
- hollerith 15y ago
  I have seen news reports of studies done by public-health researchers who worry about computer keyboards and phones after measurements showed surprisingly high numbers germs on these items. It might be that the researchers were worried only about germs that can survive for only a few days or cannot survive the type of cleaning achievable without completely disassembling the phone, but it is not obvious to me that that is the case. For example, one hears about these biofilms that allow germs to survive for very long times. What are your reasons for believing that just being in the same room as other people exposes a person to more germs?

mrfu 15y ago

"At Priceonomics, we firmly believe that resale value is the best objective indicator of product quality." I may have missed something, but given that prices are supposed to reflect the supply vs demand ratio (in a sane market), how can they end up "firmly" believing that resale value is an objective indicator for quality ?

jrockway 15y ago
Because they like Apple and have some "data" that shows Apple is better. The only missing piece is how that data makes Apple better, and that's what this statement is for.
dpcx 15y ago
For the same reason that having only one car available won't make people pay exorbitant sums of money for it. People pay what they perceive the item is worth, typically based on quality. Sure, some people will always buy the cheapest car (or phone), but most people want a phone that will last. They'll pay a little more for a car/phone that will last longer.

sp332 15y ago

I have an EVO 4G from Sprint. It's less than 2 years old (still on the original contract) but it's been EOL'd by Sprint. What's funny is that you can still buy it from them, get a new contract for 2 years starting from now, but they've already guaranteed that there will be no updates for it anymore.

deepkut 15y ago

This is an incredibly interesting article though I would urge you to include some methodology. With some proper evidence behind these bold statements, you'd be making headlines at TechCrunch (you still might anyways)! Great read, I'm now interested in your business.

cuu508 15y ago

"At Priceonomics, we firmly believe that resale value is the best objective indicator of product quality." I'd say it indicates the speed of improvement--whether quality has topped out, or is still improving. Resale value for a hammer in a year migh be close to 100% of its original value. It might be used and scratched, but it still works as new, and there aren't any new revolutionary hammers out on market. Same with DSLR lenses, for example. Top end MTB bikes are of very high quality, a joy to ride. But they depreciate sometimes by 50% in a year: new models are out, lighter, stronger, better-handling and everyone wants to upgrade.

raganwald 15y ago
Top end MTB bikes are of very high quality, a joy to ride. But they depreciate sometimes by 50% in a year: new models are out, lighter, stronger, better-handling and everyone wants to upgrade. be careful. Some high-end MTB brands depreciate more than others, which is the exact point this article is promoting about phones.
- cuu508 15y ago
  And I'm saying it might be not because of difference in immediate quality, but because some brands have found their working formula and slowed down experimenting, while others continue cranking out new stuff. Brooks saddles look the same, act the same and cost the same now as 20 years ago. A saddle that has been sitting in warehouse for 5 years would probably have about the same market value as saddle made this year. I'm no Brooks expert but that's the impression I get. Shimano on the other hand updates its component groups each year. Their products are highly evolved already, but still they find things to improve. So people upgrade.

hackoder 15y ago

The thing with lumping all 'Android' together is that it gives the wrong picture. Similar to lumping all PCs. When you buy anything non-Apple, you have to be a smart buyer. This can be good or bad, depending on your world view. If you compare premium non-Apple brands, they compare favoribly to Apple. For example, my Nexus S was $300 off contract (brand new). This is much cheaper than the comparable iPhone 4 at that time, retains good resale value, and will probably be fast enough/supported for as long as the iPhone 4. On the PC side, ThinkPad T/X series offers similar (or even better!) reliability/cost effectiveness/resale value to MacBooks. For example, the x220 series configured new at lenovo will cost ~1000. Current resale puts it at around 800, which is better than the MBP (for e.g. base at $1249, refurb @ apple for $1049, and resale at around $950).

sjs 15y ago
Even if you break out Samsung, Motorola, HTC, etc. you will still have the same problem within each manufacturer's lineup. Comparing individual phone models is logical but nobody does it for some reason. It seems that people always want to compare the iPhone (a single hardware line) to Android (software) which is just bizarre.
- alsocasey 15y ago
  Resale value is also being measured as a percentage MSRP, which makes sense for the iPhone, as it isn't really available for anything but MSRP, but isn't as realistic for most Android phones that can often be had for less than MSRP.
  - schraeds 15y ago
    So Android phones lose value just sitting on the shelf.
- mechanical_fish 15y ago
  Problematic it may be, but I wouldn't call it "bizarre". The fact that the iPhone has a single line of hardware evolution, a single line of software evolution, and an extremely straightforward product line at any given time is a very deliberate branding and marketing decision by Apple, aimed at avoiding exactly the situation we see in the rest of the phone market: The marketplace is a confusing zoo in which the available mix of models changes every five minutes and nobody knows what they're buying unless they have the data sheet sitting open in front of them.

Gormo 15y ago

> At Priceonomics, we firmly believe that resale value is the best objective indicator of product quality. Really? It might be a decent indicator of product quality relative to other products on the market, but even then, plenty of extrinsic factors - from speculative bubbles to the lack of knowledge of longer-term product quality - can influence the perceptions of relative value that drive market prices. That aside, how indicative of the overall market for phones is the specific segment of those who buy second-hand phones? Unlike houses or cars, few people actually buy used phones, and those who buy new phones aren't usually thinking about resale price at their initial time of purchase. Does resale price really say a lot about the underlying product quality of a mobile phone?

thedufer 15y ago
High resale value seems like it would correlate most strongly with high initial cost and high popularity - more people would prefer to buy a used one if the initial cost is higher since they can't afford the initial cost, so both increase the demand. Android/Blackberry popularity is spread over many more models than the iPhone, and are usually cheaper. "We firmly believe", on the other hand, is not an indicator of anything. "We've defined quality in such a way that" would be more apt - quality is a hard-to-define term, and they don't even try.

cheez 15y ago

Who cares?

GernBlanston 15y ago

More fodder for discussion here: http://allthingsd.com/20120117/secondary-iphone-market-a-boon-for-att-verizon-and-apple-too/ http://allthingsd.com/20120117/secondary-iphone-market-a-boo... Turns out that the secondary market for the iPhone is nearly as robust as the primary market. And it’s growing steadily larger and more important for Apple’s carrier partners, and for Apple itself.

LVB 15y ago

It's an interesting analysis, but I don't see how the results would affect my buying decision at all. What's the actual dollar amount difference in reselling an iPhone for 53% of original price vs Android at 42%? Maybe $50-$80? How much in carrier fees have I spent over that 18 months? Well over $1000. The difference in resale value versus the entire expense of owning these phones is insignificant. Or at least it's not significant enough to outweigh the preference one might have for a given phone. What if the numbers were flipped? How many iPhone owners would choose to switch to Android if they knew they could save $70 over the next year and a half?

freehunter 15y ago
I always hate the argument that phone costs don't matter because carrier costs are so high. You have to pay the carrier cost anyway. Service is a fixed cost, the phone is the variable cost. The only time carrier costs should be added into the equation is when you have to buy an "iPhone" plan that costs more or less than the comparable "smartphone" plan. If your choice of smartphone doesn't change the cost paid to the carrier over the term of a contract, the data point is useless.
vacri 15y ago
They lost me with this: Skip those extra GBs on your iPhone. An additional 8GB of hard drive costs you an extra $100 upfront but only adds $10 to the resale value of your phone. The secondary market doesn't value extra hard drive space on an iPhone, so get the one with the smallest amount of disk space. Hey fellas - there is more to a phone than resale value. If you're only thinking about how much you can sell it for at the end of possession, then I think I'll give your review a skip.
- LVB 15y ago
  I found their opening quotes to be a bit at odds with the rest of their logic: "It's probably hard for a Mercedes owner to describe to a Honda owner how attention to detail makes their driving experience better." Right, and said Mercedes owner probably isn't going to buy a Honda next time just because it holds its resale value better.

jakeonthemove 15y ago

I stopped reselling my electronics and just give them away to whomever needs them - somehow, that's less depressing than knowing I bought something for $500 and now I sell it for $100 (and my stuff looks like new even after years of use). Buying used smartphones, on the other hand, is great - you can get a G2X or a Dell Venue Pro (excellent Windows 7 phone) for under $300 easily, and it will work just as well as any other phone (especially the G2X with a custom ROM)...

dodedo 15y ago

I realize this isn't quite the point of the article, but I have a $29.99 Nokia phone I've been using for years and I'm pretty sure I can resell it for at least $20. Non-smart phones hold their value best of all.

moylan 15y ago
some are even worth more than they were origianally. http://www.itp.net/553344-hackers-pay-top-dollar-for-old-nokia-1100-handsets http://www.itp.net/553344-hackers-pay-top-dollar-for-old-nok... i've found that nokias sell well second hand. i wouldn't recommend an iphone second hand as they are much more fragile than old solid nokias. i've seen a number of iphones that the mic or wifi no longer works on and knowing the users i don't think they abused the devices that much.

gardarh 15y ago

Look at the "Crackberry Index" chart. Does anyone else get the feeling they have too few datapoints to reach any meaningful conclusion?

bambax 15y ago

Quoting Shakespeare at the end of the post sounds a little forced.

andrewrawr 15y ago

The iphone is an ipod touch on the secondary market. But a used Android phone looks pretty much useless to most people, especially when you can get a new phone for free or cheap. The Google Galaxy Nexus is now $99 on Amazon Wireless -- quite a bit cheaper than any comparable iphone. It's interesting that we used to throw away cell phones but now they have value.

teyc 15y ago

Percentages themselves do not tell the whole story. Better to use the total cost of ownership. A $1000 phone that loses 35% of its value ($350) compared to a $500 phone that loses 50% of its value ($250) can put things into perspective.

HackR 15y ago
This needs to be taken into account, thanks for bringing this up, didn't think about it!

quaker 15y ago

No doubt there is a robust resale market for iPhones, but if I'm not mistaken, this article fails to take into account initial subsidized market prices when making it's lifetime value calculations. Yes, iPhones are subsidized too, but not completely; whereas most Android phones are not subject to the same price-fixing policies, and can be purchased via authorized Verizon, AT&T, Sprint, or T-Mobile resellers at significant discounts. In fact, 90% of Android phones -- even those with unsubsidized price tags of $500 -- can be purchased for FREE (or sometimes $.01) with a contract from a carrier-authorized retailer such as Amazon or Wirefly. So yes, if you walk into the Verizon store and pay $200 for a Droid 3, your lifetime cost may end up being higher than an iPhone. But if you have a brain, and get your Droid 3 from an authorized Verizon dealer, you pay $0 for the exact same product, and the math shifts rather quickly.