"The empirical facts are in, and the iPhone is wiping the floor with Android and BlackBerry in terms of resale value." That's the opening line from a new study published by Priceonomics, a website aimed at helping consumers get the best value for their dollar. Priceonomics argues that its data shows the iPhone is a better long-term investment than smartphones running Android or BlackBerry OS. Let's look at the methodology and the numbers.
Priceonomics decided to measure how phones depreciate in value. It compared a phone's current price on the used market to its original, unsubsidized sale price from when it was released. It took the numbers from all the iPhones, 70 popular Android smartphones, and 30 popular BlackBerry smartphones.
Priceonomics then split the phones into groups, showing their value at release, then at 12, 24, 36, and 48 months. It then calculated which phones had the best resale value based on these groupings, as well as which platforms in aggregate retained the most value.
"The highest-quality phones should have the best resale values over time and crappier phones should depreciate the fastest," writes Priceomomics. "The evidence is clear--the winner is the iPhone."
[ Sprint may have gained customers by offering the iPhone, but the company still faces challenges. Read more at iPhone Subsidies Hurt Sprint's Bottom Line. ]
For whatever reason, Priceonomics chose to compare depreciation figures for phones that are resold at the 18-month mark. At 18 months, an iPhone still retains 53% of its full retail price versus 42% for Android and 41% for BlackBerry. These are the figures it is pointing to when it says "the iPhone is wiping the floor with Android." If you look at the data at the 24-month mark, the values are much more aligned. iPhones still hold 35% of their original value when they are two years old, while Androids and BlackBerrys hold just above 30%.
We're talking about a difference of about $10 or $15. Who the heck cares about a difference of $10 or $15 for a two-year-old phone?
Almost all phones hold only 25% of their original value at the 36-month mark, whether they're iPhones, Androids, or BlackBerrys.
"Our data suggests that buying an iPhone is a better economic decision than an Android or BlackBerry," concludes Priceonomics. "If you buy an iPhone, down the line you will have a piece of hardware that still has economic value. In irony of ironies, it is BlackBerry and Android manufacturers that need to provide non-economic justifications for purchasing their products."
I can't say I really agree with this conclusion. First, not all decisions are made based on economics. People often make emotional purchases, not economical ones. Based on how often iPhone owners upgrade their devices (probably close to once per year), the 18-month-old resale point is an arbitrary one, picked solely because it has the biggest gap in value percentages.
Aside from the emotional aspect of purchases, there's the preferential one. Some people prefer one platform to another, plain and simple. They may not be happy or satisfied with a device that has a higher resale value if it means not getting what they want.
Also, not all smartphones are purchased by individuals. Many are purchased by corporations at bulk pricing, which negates the economics entirely.
Whether or not you agree with Priceonomics' conclusions, the site does offer some worthwhile pointers.
It recommends that all smartphone owners sell their old phone when buying a new one. If you're breaking your contract, you can use the proceeds to pay the early termination fee. If you're eligible for an upgrade, you can use the proceeds toward the fee for the new phone.
Priceonomics also notes that it is cheaper to break your contract than to buy a phone without a contract. Even with a $350 early termination fee, it's usually $100 cheaper to get a subsidized phone and break the contract than to buy a no-contract unsubsidized phone.
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