With a difficult 2020 over and the very first COVID-19 vaccines being delivered across the globe, 2021 can’t come soon enough. This is great news for humanity as well as businesses and the world economy.
The news is positive for mobile operators as well. After a drop in smartphone sales in the first half of 2020 due to a pandemic-related decrease in consumer confidence in combination with a lack of enthusiasm for premium priced models offering minimal new features, it appears some recovery is underway. The combination of 5G availability and impressive upgrades in cameras and other functions along with online purchase and delivery options has created the perfect storm to motivate consumers to invest in brand new smartphones.
President,
Global Sales
According to analyst firm Gartner, 366 million smartphones were sold globally in the third quarter of 2020. This is a decline of 5.7% from 2019 but an improvement over the 20% decrease in the first two quarters of 2020. Smartphone sales also saw a boost on Black Friday with online sales reaching $3.6 billion, an increase of 25.3% from 2019. In-store and curbside pickup of mobile phones also proved popular on Black Friday, with these alternative delivery methods growing by 52% since last year.
And although 5G might be the magic bullet the industry needed to trigger revitalized mobile device sales, not even a pandemic could dampen the demand for wearables. Withglobal shipments of smartwatches, fitness trackers and hearables expected to reach 396 million units in 2020, a 14.5% increase from the previous year according to IDC, wearable devices are clearly here to stay.
With the uptick in sales of mobile devices and wearables, what might this mean for the secondary market and how will market growth impact the global e-waste crisis in 2021?
#1: Aggressive carrier 5G upgrade strategies will drive a smartphone upgrade ‘supercycle’
Following Apple’s iPhone 12 launch, carriers have pursued aggressive pricing strategies offering high value trade-in offers for used devices as an incentive to upgrade to Apple’s flagship 5G device. And, as 5G continues to mature in some markets, carriers will be bullish about driving sales of new devices following the significant 5G infrastructure investments they have made to date. In some cases, device upgrades will even be offered for free. This, coupled with the increased demand for flagship LTE devices in countries where 5G is in relative infancy, means we should expect to see a device upgrade supercycle in 2021. Carriers will be keen to stimulate upgrade cycles following poor new phone sales in recent years - and we’ll also see refurbished LTE devices flood the secondary market at a higher price point and higher volume. This upgrade supercycle will call on the entire industry to manage the scale of the operation, such as data erasure providers, who will need to process millions of devices quickly and securely.
#2: The smartphone upgrade supercycle will contribute to the growing e-waste crisis, pushing it further into the spotlight
IDC is predicting strong sales of 5G devices in 2021 with 4.4% year-over-year growth. This is great news for consumers and organizations taking advantage of the generous trade-in offers from major operators. While this sales supercycle will result in a large number of used devices entering the circular economy – including the secondary market – unfortunately, too many will end up in landfills and accelerate the worsening global e-waste crisis. More than 53 million metric tons of e-waste was produced in 2019. Approximately 10% of that waste came from small electronics, including smartphones. With technology investment on the rise to support a move to home working environments and a growing emphasis on corporate social responsibility actions, e-waste is an issue gaining visibility with business leadership. In fact, our own research shows that nearly half (47%) of large global enterprises have now created roles responsible for implementing and ensuring compliance with e-waste policies specifically to deal with technology investments generated from the COVID-19 pandemic. The incentive to extend the life of mobile devices and push them into the circular economy will continue to grow, with organizations looking to secure device erasure as a crucial factor in achieving their sustainability goals.
#3: Robust demand for wearables will drive secondary device market growth
Wearables present an interesting opportunity to the secondary device market and are set to be a key driver for its growth in 2021. Despite not yet being available in as high volumes as smartphones, wearables offer the device processor and reseller markets a much better margin. The channels already exist- and are ready and willing to push these refurbished devices out quickly. However, the ability to process these devices at the right speed will be crucial in order to maintain their residual value and secure the right price point on the secondary market. Demand will continue to grow for these types of devices given current market penetration and the much smaller number of individuals that have a wearable compared with the mature smartphone market.
If there’s one takeaway from the pandemic, it’s that we depend heavily on technology. We’ve always known our smartphones were important, but during this public health crisis they became crucial to helping us maintain very important personal and business relationships when we were all required to keep our distance. This will not change dramatically as we enter a new year. Yes, the world is beginning to heal, but we will not go back to pre-COVID business-as-usual any time soon. The new normal will see us continuing to benefit from mobile technology to stay connected, stay healthy and work from anywhere. This is very good news for both mobile operators and consumers as we all maintain our reliance on technology as we navigate 2021.
