Thinking of picking up the new Samsung Galaxy S8 with an eye to reselling it down the road?
You may want to think again as that state-of-the-art smartphone, much like a brand new car, loses much of its value just as soon as you drive it off the lot.
Samsung’s flagship devices lose about half their value within a month of release and about 80 per cent after two years, according to the UK gadget-buying website musicMagpie.
Half the value of last year’s Galaxy S7, for example, evaporated in its first month and was worth only 41 per cent of its initial price tag 10 months later.
Local resale sites support the findings. The Galaxy S7 cost about Dh2,499 in the UAE when it launched last March, but SellAnyPhone.ae now lists used base models at about Dh836.
The Galaxy S5, meanwhile, was worth only about 20 per cent of its initial cost in 2016, or two years after its release, according to musicMagpie.
If the South Korean company’s pattern holds, the just-launched Galaxy S8 – selling now for about Dh2,799 – will be worth less than Dh1,400 by this time next month, or Dh560 in two years.
That’s the problem with technology – something newer and better is always just around the corner, which means its value drops quickly, more so than even cars. Samsung phones actually have it good, comparatively. Devices from other manufacturers depreciate even faster.
Fellow South Korean electronics giant LG is the worst-performing brand after a year, according to musicMagpie. Its phones, such as the G4 and G5, typically lose three quarters of their value in that time. The company is just now releasing the G6, its competitor to Samsung’s flagship phone.
Over two years – the typical length of contracts that wireless carriers offer in exchange for upfront discounts on devices – LG fights it out for last with Taiwan’s HTC, maker of the One M series. The companies’ average value reductions amount to 85 per cent and 84 per cent over that time, respectively. That’s worse than any car, as musicMagpie notes. The Fiat Quobi, for example, loses just 70 per cent of its value in two years.
Not every phone manufacturer is in the same boat, however. Apple’s iPhones are the virtual Toyotas or Hondas of the mobile industry, retaining their value relatively well.
The iPhone 7, released in September, depreciated by only 34 per cent after a month on the market. As of this past January, it was down only 38 per cent.
Broadly speaking, iPhones lose about 57 per cent of their value after a year and about 71 per cent after two. The iPhone 6, now about two-and-a-half years old, initially cost Dh2,599 but can be had via SellAnyPhone for about Dh631, or about a quarter of its initial value. These are still big reductions, but they’re not as bad as the others.
Several factors contribute to the iPhone’s better value retention. For one, Apple tends to release fewer devices than its competitors, so the latest iPhone is usually the best iPhone on the market for a full year.
Samsung, on the other hand, has two flagships – the Galaxy S line and the Note brand, exploding batteries notwithstanding – that ultimately fragment the resale market.
Apple’s devices are also more tightly integrated. The company designs the iPhone’s hardware and software, so it can ensure that older devices get new updates and features. Apple also controls when users get those updates without any interference from wireless carriers.
Samsung, LG and HTC all work with Google’s Android and are thus at the mercy of the search giant’s whims, which means their hardware may not always be compatible with new software features.
Moreover, carriers also typically have some say in when or if users get updates – and they don’t always allow them. Without new capabilities or access to the latest app iterations, such phones quickly lose their value.
Ultimately, the resale market says a lot about the overall market for smartphones. As Liam Howley, musicMagpie’s marketing director, puts it: “This really does paint a picture of an industry where brands are struggling to keep up with the dominance of the mighty Apple and Samsung within the market.”
It also highlights the fact that no one will ever get rich from selling their old gadgets.
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Loser of the Week: Facebook
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Peter Nowak is a veteran technology writer and author of Humans 3.0: The Upgrading of the Species.
business@thenational.ae
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