Depreciation is a nasty word no matter how you look at it. Its very definition – "a reduction in the value of an asset with the passage of time, due in particular to wear and tear" even sounds revolting. Anytime there is a reduction in the value of something that is owned it's likely upsetting – especially with higher cost items and products like vehicles. It is a fact that in the US, a new car will lose up to 19-percent in the first year you drive it off the lot. Another purchase that is near and dear to us techies is when we acquire a new smartphone – talk about depreciation – some cell phones can lose up to 65-percent of their value only a month after they are released!
It should come as no surprise that a smartphone depreciates more than a car or that some brand of smartphones depreciates less than other brands. Yes, it's easy to see on the graph that the iPhone depreciates less than Android models – it is not because an iPhone is a better-made device. It comes down to two specific reasons – one, the iPhone is manufactured by only Apple and comes out once a year, therefore it can maintain its pricing for the entire year. The second reason is that there is one iOS and even an older model iPhone is eligible for upgrades to the latest software.
Android, on the other hand, has multiple manufacturers, models, and several operating system versions going at once. You never have to wait more than a month for a new device to be introduced – sure, Samsung, HTC, LG, and Motorola (Lenovo) generally have a new flagship just once a year, but they also put out low-to-midrange models as well. All of these devices as well has what version of Android is on the device makes a difference in its market value. Another reason for Android’s depreciation is that Android users tend to jump from one model to another, always looking for the next big thing. There is always a smartphone with a better display, better processor, more RAM and memory, better cameras, and more features. If users want the biggest and fastest, then as they move on, the older models tend to command less money.
The largest chunk of depreciation comes in the first year of ownership and after that, it generally drops off to an average rate of 1-3-percent a month. As we said earlier, the amount and speed of depreciation depend on the brand name and the model. For instance, a Samsung Galaxy S7 Edge will depreciate less than a Samsung Galaxy J2 (2016). The S7 Edge is their premier smartphone (other than the Galaxy Note series) with the best of everything and customers know that there will not be a replacement for a year from the time of release.
Fast rates of depreciation can hit specific models – the HTC One M9 for instance, lost 65-percent of its value in only one month. This is HTC’s flagship model and was a good smartphone on many fronts. Was it the competition that stole sales from potential buyers? Did the Galaxy S6/Galaxy S6 Edge that was released one month after the HTC M9 steal its thunder? It could be that many complained about a boring redesign of the same device and the fact that it was still pushing the Full HD display. Just as options make a car retain its value or create desire, so do the specifications in a smartphone.
Some may be wondering if it pays to sell or trade-in your smartphone when you get a new one – that would be a resounding, ‘yes!’ This is especially true if you old phone is not being handed down to a family member or friend. There are stores you can go to, or even your carrier may offer a trade-in value towards your new purchase. Selling on-line is a snap with musicMagpie, Swappa, Gazelle, etc. It could be as much as $300 for an in-demand device or as little as $30 in beer money - but is a few cold beers better than your old phone sitting around collecting dust?