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Interest in smartphone trade-ins surges

Matt Hamblen | Aug. 6, 2013
Carriers are creating new loyalty plans designed to help keep customers from trading-in with another carrier.

Smartphones have strong trade-in value, sometimes as much as hundreds of dollars.

In July, the trade-in value of a 16 GB Apple iPhone 4S on AT&T's network ranged from $150 to $275, depending on whether the party buying the device was a carrier, retailer or manufacturer, according to NPD Group.

That means an average consumer might use the amount a carrier or other party is offering for a smartphone trade-in to shop around to get more dollars from a different carrier. In other words, the consumer might have some modicum of power in an obviously organized and aggressive smartphone resale market.

At least, that's one theory of the how the smartphone trade-in market works — it assumes that the next carrier offers good network connections and prices for voice and data, at least as good as the current one.

As no-contract wireless service plans begin to emerge from U.S. carriers, there appears to be a booming interest in trade-ins, according to a poll released Monday by NPD Group.

Of 1,000 smartphone users polled, 55% plan to take advantage of a trade-in with their next upgrade. That's a big increase from the 13% of respondents who said they traded in their last smartphone.

"The trade-in concept is gaining consumer traction rapidly," said Eddie Hold, an NPD analyst.

About 30% of respondents said they are willing to switch carriers to get a better trade-in value, while more than 60% said they are willing to change retailers like Best Buy or Walmart to get a better trade-in value, even if they stick with the underlying carrier.

A sudden increase in trade-ins could be a boon for retailers and smartphone makers, and a potential threat to carriers, Hold said in an interview. "The carrier grasp of the smartphone consumer could become more tenuous," he wrote in a new blog post.

To prevent customers from leaving their ranks to join another carrier and to help lessen the impact of trade-ins, loyalty plans from T-Mobile, AT&T and Verizon Wireless called Jump, Next and Edge, respectively, have recently been launched, Hold said.

All three plans eliminate long-term service contracts, although they still require paying off a sizeable portion of the phone's full value before being able to trade up to a new device with the same carrier.

"Every carrier wants to keep every single customer, and they want to get at more of the other carrier's customers," Hold said. It's too early to judge the impact of the loyalty programs, he added, but they seem to have contributed to the already-growing interest in getting top value for a smartphone trade-in.

Hold said that while the poll results indicate a strong interest in trade-ins, it's possible that when the time comes, customers will simply jump at the first deal without shopping around.

 

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