The value of an iPhone evaporates half as fast as a comparable Android

A new car loses half its value when you leave the lot. An iPhone takes longer.

From BankMyCell’s 2020-2021 Depreciation Report:

The data below quotes the trade-in depreciation from the initial buyback price for a used iOS or Android device priced at $700 or over, then tracks its decline yearly.

apple android value evaporates

 

In one year, the current average depreciation of a new iPhone’s trade-in value is -16.70%, compared with Android’s -33.62%.

In two years, the current average depreciation of a new iPhone’s trade-in value is -35.47% compared with Android’s -61.50%.

After four years, the gap begins to close, with iPhones losing an average of -66.43% of their initial buyback value, compared with Androids -81.11%.

My take: Which makes more sense, upgrading to a new phone every year or sticking with the one you’ve got to the bitter end?

15 Comments

  1. David Emery said:
    There are explicitly -2 points of measurement- here:
    1. How much you get paid for your used (phone | car | whatever) when you sell/trade-in

    2. How much you pay to buy a used (phone | car | whatever)

    The spread (“arbitrage” for used things) is the profit for the resale industry.

    I don’t know which is being measured here. But I do know that I was disgusted by the difference between the trade-in price on a 64gb phone vs a 256gb phone, when compared to the difference in the purchase price for same.

    0
    January 22, 2021
    • Bart Yee said:
      Well, in fairness to Apple, they make a pretty good markup on the difference between 64 to 256gb storage options (currently $150) on the difference in wholesale price of the specific memory chip(s). As they should and can. However, upon resale, unless there’s huge demand, you end up taking the trade-in offer of roughly the wholesale difference in memory prices. The trade-in company sets their prices, you have to decide if the reduced friction of their offer is worth the incremental price improvement of selling your iPhone privately.

      0
      January 22, 2021
  2. Jerry Doyle said:
    When I see an article like this with a caption so blatantly in error, I cannot accept fully the entire article. The caption says, “…. A new car loses half its value when you leave the lot.” That statement is ludicrous! Cars depreciate less than iPhones, if we even can believe “BankMyCell” data. I am a car aficionado so this is why the caption disconcerts me, and I find it offensive and highly misleading.

    Below is an article by Karen who has done her financial homework on car depreciation rates. I just hope that “BankMyCell” did similarly.

    https://finance.yahoo.com/news/much-100-000-car-depreciate-090000316.html

    2
    January 22, 2021
    • John Konopka said:
      I have issues with her chart. I don’t doubt her numbers. But she is working with a small, expensive subset of all cars. As she points out later, different cars depreciate faster than others. It is likely that less expensive cars depreciate faster. Also, she doesn’t account for cars that simply die. Her chart shows the price of a 30 year old car. She should put next to that the odds that the car wouldn’t survive 30 years. Many cars incur breakdowns where the repair cost is more than the value of the car so they head off to Pick-n-Pull to be used for parts.

      1
      January 22, 2021
    • Bart Yee said:
      Karen Doyle (no relation presumably?) essentially used the Navy Federal Credit Union depreciation (DP) calculator to come up with her figures. It assumes roughly 25% depreciation in year 1, then 12-15% each year thereafter. As pointed out though in article and here, vehicle qDP vary (sometimes greatly) by model, size, body type, config, and initial costs.

      Unsurprisingly popular models from reliable companies fare better and unpopular models fare worse. Trucks, large and Med SUV’s and some sports cars hold well. Oddly, many sedans, econocars, hybrids, even electrics can be worse. I’ll detail some in next post.

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      January 23, 2021
      • Bart Yee said:
        Always important to remember trade-in will be less than resale value.
        From: https://www.iseecars.com/cars-that-hold-their-value-study

        Top 10 Vehicles Having The Lowest Five-Year Depreciation:
        1. Jeep Wrangler (off-road SUV): 30%
        2. Jeep Wrangler Unlimited (off-road SUV): 31.5%
        3. Toyota Tacoma (midsize pickup): 32.0%
        4. Toyota Tundra (full-size pickup): 35.9%
        5. Toyota 4Runner (midsize truck-based SUV): 36.5%
        6. Porsche 911 (sports car): 37.2%
        7. Honda Ridgeline (midsize pickup): 38.1%
        8. Nissan GT-R (sports car): 39.4%
        9. Nissan Frontier (midsize pickup): 39.5%
        10. Subaru WRX (sports car): 40.0%

        Top 10 Vehicles Having The Highest Five-Year Depreciation:
        1. Maserati Quattroporte (luxury car): 72.2%
        2. BMW 7 Series (luxury car): 71.3%
        3. Nissan Leaf (electric car): 71.0%
        4. BMW i3 (electric car): 70.9%
        5. BMW 5 Series (luxury car): 69.2%
        6. Acura RLX (luxury car): 69.2%
        7. Ford Fusion Energi (plug-in hybrid): 69.1%
        8. BMW 6 Series (luxury car): 69.0%
        9. Jaguar XJL (luxury car): 68.9%
        10. Chevrolet Volt (range-extending electric car): 68.1%

        Note how some expensive “aficionado” cars fare pretty badly and are outperformed by trucks and SUVs??

        The article has some nice tables of various car types and classes including sports cars, and some surprising results based on actual market numbers.

        0
        January 23, 2021
        • Bart Yee said:
          Jerry, while I appreciate your enthusiasm for cars, the actual linked BankMyCell article about smartphone depreciation did NOT make the car depreciation comment anywhere (I read it, searched it, didn’t find it). Perhaps there was some poetic license taken with the caption that was appended by our host?

          That said, plenty of cars depreciate faster than an iPhone over the first two years, especially if heavily used or in poorer condition when evaluated. The curves for many vehicles drop a lot (25-35% year 1, another 5-15% in yr 2, then more gradually in yr 3 & 4, then more aggressively in years beyond with leveling out after 7-10 years, of course depending on mileage and condition, plus regional and local supply and demand.

          Considering smartphones are both cheaper, more ubiquitous, and much more “liquid” as a used item or easily discarded, retired, or set aside as “obsolete” or unsupported (Android) after 3+ years, it is not surprising that smartphones after 3-4 years end up with >/= 50% depreciation compared to vehicles typical 50% loss at 4-5 years, somewhat comparing Apples to oranges.

          1
          January 23, 2021
  3. Gregg Thurman said:
    Three years is my cycle, excepting significant performance functionality gains.

    I have an iPhone 10S Max, and I’ve been extremely tempted to get the 12. What’s holding me back is the realization that 5G will be far more ubiquitous when the next iPhone is launched.

    1
    January 22, 2021
    • Fred Stein said:
      Same here, Gregg. Soon we’ll see iPhones with Apple 5G modems. When 5G is more widely available, we can ‘tether’ rather than using less secure public wifi.

      0
      January 22, 2021
  4. Robert Paul Leitao said:
    The fact that iPhones retain comparatively greater value following original purchase underpins the feasibility of Apple’s iPhone annual upgrade program. The comparatively high resale values of newer iPhones also supports Apple’s pricing strategy on new handsets. Under the annual upgrade program, a consumer receives a new iPhone every year but pays for the equivalent of a new iPhone over two years. I’ve been a subscriber to the annual upgrade program since it began. The monthly payment has been fairly consistent over this time.

    The resale of newer, pre-owned iPhones doesn’t reveal itself directly in Apple’s financials. However, it’s an important component of Apple’s ability to expand its global user base and increase services revenue. I’m less concerned with the number of new iPhones Apple sells each year and more concerned with the pace of growth in the global user base and the rate of services attachment worldwide.

    2
    January 22, 2021
  5. Jerry Doyle said:
    “…. My take: Which makes more sense, upgrading to a new phone every year or sticking with the one you’ve got to the bitter end?”

    That is an excellent “My take” statement that gives one pause. I see individuals on both spectrum such as Robert Paul Leitao and folk with whom I run into often still clinging to old iPhones 4, 5, and even 6 years old. I know a lady who a couple of months past upgraded from her iPhone 5. Unbelievable! I know a number who never purchase a brand new model, but who always upgrade to a model 2, 3, and 4 years old. A friend just purchased from AT&T an iPhone 7. That phone is going on 5 years old. It blew me away to learn AT&T even sold iPhones that old.

    Continue….

    0
    January 22, 2021
  6. Jerry Doyle said:
    Continued….

    When one examines individuals purchasing iPhones and (this is important) how they use them in their day-to-lives, then the answer seems more to be purchases are carried out on an “individualized personal use” basis. Someone like Robert Paul wants (and most likely needs) the latest and greatest technology, uses it for work in addition to activities of daily living, resides in a geographic area where the latest cellular signal strengths are prevalent and benefits from the annual Apple iPhone trade-in program. Many for whom I know still lack access to omnipresent 4G signal strength, use their phone primarily for texting and making calls (not even reading emails which may be difficult to download in some areas due to poor signal strength). So, for them to consider the upgrade program borders on asinine. They may not see 5G for years in their geographic area. 5G as I write is no where, nada, in my state.

    In summary, relative to your take it is an “individualized personal use” decision how one plans to use the phone. Lastly, iPhones are built to last easily for five years, and even longer. I still have an old 5 and 6+ I use frequently.

    1
    January 22, 2021
  7. Brian Nakamoto said:
    From a security perspective, upgrading to the latest new iPhone every year is worth it. Apple’s iPhone Upgrade Program is great. It’s telling that Google doesn’t have a similar program for their Pixel. The only reason I trade-in a Pixel is to avoid the hassle of selling it to eek out slightly more value. The trade-in value of a prior gen Pixel is sad, almost Apple Watch-level sad.

    0
    January 22, 2021

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