Report: The refurbished smartphone market is booming

One major factor that’s driven the explosive growth of the global smartphone market is its short, roughly two-year upgrade cycle. But now that that even three and four-year old smartphones are powerful enough for most people’s daily use, there’s about to be an big jump in sales of secondhand and refurbished smartphones, according to a new report from Gartner.

Gartner expects the worldwide market for refurbished smartphones to hit 120 million units by 2017, for a projected $14 billion in wholesale revenue. That will be up from 56 million refurbished phones shipped in 2014. Often, refurbished devices are “good as new” for the consumer. Although they might not come in original packaging, they usually have been tested for defects and arrive scratch- and dent-free, sometimes with a new battery.

Obviously, anyone who purchases a secondhand smartphone is significantly less likely to purchase a new smartphone, which could affect the revenue not only of smartphone makers like [company]Apple[/company] and Samsung, but also the demand for parts in the supply chain. It could also affect companies that focus on mid-range devices, like Xiaomi. Instead of purchasing a phone that’s a “good value,” an older premium device for the same price could be very attractive.

Gartner points out there’s an opportunity for United States companies to send old devices overseas — or, into the “worldwide market.” The iPhone 4S might be seen as an older, unattractive device in rich markets, but given Apple’s premium brand recognition, refurbished units could be more desirable than a similarly priced new phone in developing markets.

Manufacturers also use refurbished units as warranty trade-ins. When you get a new iPhone from an Apple Store because your old one wasn’t working, it’s probably a refurb unit.

Where are these secondhand devices coming from? Gartner surveyed consumers in the United States and Germany — two mature and rich smartphone markets — and found that nearly 64 percent of devices found a second life, usually through private sales and trade-in programs, like the ones your carrier offers when you upgrade your device. Twenty-three percent of devices were handed down to a friend or family member. According to the survey, only 15 percent of devices languished unused, and only seven percent were officially recycled.

Of all the American carriers, Sprint might be in the best position to take advantage of the global market for refurbished smartphones. Its CEO, Marcelo Claure, cut his teeth at Brightstar, which does a lot of smartphone refurbishing business. Plus, its new leasing programs mean that in about two years, the company is going to have a lot of used iPads, iPhones, and other high-end devices on hand. Many of those devices could stay in the United States, because Sprint’s roster of smaller prepaid operators need phones that work on Sprint’s CDMA network.