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

The thing with lumping all 'Android' together is that it gives the wrong picture. Similar to lumping all PCs.<p>When you buy anything non-Apple, you have to be a smart buyer. This can be good or bad, depending on your world view.<p>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).

&#62; At Priceonomics, we firmly believe that resale value is the best objective indicator of product quality.<p>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.<p>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.<p>Does resale price really say a lot about the underlying product quality of a mobile phone?

One explanation: The rapid rate of change in Android phones vs Iphones?<p>Consider if a car company released 4 model updates per year instead of one.<p>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).<p>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.

"At Priceonomics, we firmly believe that resale value is the best objective indicator of product quality."<p>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 ?

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.<p>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.

"Our data suggests that buying an iPhone is a better economic decision"<p>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.

It's an interesting analysis, but I don't see how the results would affect my buying decision <i>at all</i>. 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.<p>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?

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).<p>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)...

"At Priceonomics, we firmly believe that resale value is the best objective indicator of product quality."<p>I'd say it indicates the speed of improvement--whether quality has topped out, or is still improving.<p>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.<p>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.

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.

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.

Nice job leaving the rest of the headline off.<p>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.

More fodder for discussion here: <a href="http://allthingsd.com/20120117/secondary-iphone-market-a-boon-for-att-verizon-and-apple-too/" rel="nofollow">http://allthingsd.com/20120117/secondary-iphone-market-a-boo...</a><p>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.

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&#38;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.

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

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.

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.

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

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)!<p>Great read, I'm now interested in your business.

Percentages themselves do not tell the whole story. Better to use the total cost of ownership.<p>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.

Disagree with "A high resale value is the market telling you, 'this is a good car.'"<p>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.

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

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

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.

Who cares?