Longer replacement cycles for new mobile phones
According to gfknewron Consumer, 2023 was the first time that the largest share (35%) of new buyers had smartphones that were two to three years old. In 2022, buyers with devices that were one to two years old were still dominant. As Lizzie Bailey, Director for Telco at GfK UK says: “GfK's long-term sales and consumer behaviour tracking shows that consumers will pay more for advanced features. But if the innovation leap is not far enough, they will wait for something truly new before buying their next device. This helps to explain the rise in demand for second-hand and refurbed phones.”
Refurbished equals premium
‘It was time for an upgrade’ is the most common reason someone buys a new mobile handset. In 2023, when it was time to upgrade their phone, roughly a third of buyers (32%) chose a brand new model, 25% a refurbished, and just over 15% opted for a second-hand device. The UK’s used mobile phone market is split into second-hand and refurbished. The refurbished market is aimed at buyers wanting to upgrade their phone to one with newer features but for less than the cost of a new handset. Buyers of these devices tend to be affluent, and younger and shop online at specialist retailers who offer warranties.
GfK’s Lizzie Bailey says: “With a cost of living crisis, new mobile phone buying patterns are emerging. In 2022 we reported that smartphone contracts were seeing a comeback as subscribers committed to longer terms to manage rising prices and lock in the best tariffs. Now we’re tracking rising demand for used handsets, whether refurbished as a way of upgrading to a superior model for less or picking second-hand devices to keep costs down. They say ‘necessity is the mother of invention’, and with mobile phones so vital today, canny consumers are finding cost-effective ways to upgrade and replace their devices. Manufacturers, operators, and retailers need to stay ahead of these behaviours and respond to the opportunities they present.”
Topline view of 2023 results of the global smartphone market
For the full year 2023, the global smartphone market was fairly stable, with a slight increase in revenue of 0.1% versus 2022. By the end of the year, the market began to recover, with revenues in the second half of the year up 4.2% year-on-year. It's not just the half-year comparisons that reveal significant differences, but regionally too. GfK forecasts a modest growth of around 2% for 2024.
Smartphone market revenue trend by region 2023 vs. 2022:
+ 3.9% Central & Eastern Europe - 5.9% Emerging Asia (w/o China)
+ 2.0% Western Europe - 3.7% Latin America
+ 1.1% Middle East & Africa
+ 0.6% China
Globally, the average price paid by consumers for a new smartphone once again increased slightly in 2023 by USD 34 to USD 389. This is the result of continued consumer demand for device premiumization and better functionality. While 5G models already accounted for 75% of revenue in 2022, this rose to 81% in 2023. The share of smartphones with more than 512 GB of storage (+ 9 percentage points) and wireless fast charging (+ 5 percentage points) also increased.
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GfK Tech360 is a market sizing, landscape and purchases study covering telecoms connections and mobile phone devices in the UK.
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For over 89 years, we have earned the trust of our clients around the world by solving critical questions in their decision-making process. We fuel their growth by providing a complete understanding of their consumers’ buying behavior, and the dynamics impacting their markets, brands and media trends. In 2023, GfK combined with NIQ, bringing together two industry leaders with unparalleled global reach. With a holistic retail read and the most comprehensive consumer insights - delivered with advanced analytics through state-of-the-art platforms - GfK drives “Growth from Knowledge”.
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