Thursday, February 10, 2011

The new Smartphone economy & its "Blue Book"

If PCs became the symbol of the beginning of information age in nineties, then phones, particularly smartphones have certainly come to define today’s networked life. This time, it is also a global phenomenon – enabling the school children play games, amateur traders buy or sell their stocks, farmers in remote rural areas get weather news to plan their crops and on and on.

In India, where I grew up, landlines used to be a relatively premium utility. The past decade has changed that completely as land lines gave way to cell towers. Mobile phone is now the ubiquitous symbol of connectivity across the whole land, available to people of all walks of life – the rich minority and the poor majority. As an Indian friend of mine reminded me recently that to a large swath of working class in India – the central aspiration was to secure basic food (Roti), clothes (Kapda) and shelter (Mokaan). Apparently these three aspirations are now upgraded to add a fourth one – Roti, Kapda, Mokaan and Mobile !!

Here in Michigan, where I’ve been living for the last 19 years, automobiles defined the life and culture of most of the state. As the local auto industry went through its rough patches, the falling residual value of used cars, as published in Kelly’s Blue Book were closely followed as a barometer of the industry’s health. While reading an article in today’s Wall Street Journal, I was therefore thoroughly amused by a reference to “Blue Book” to describe a new budding market of used smartphones – one more reminder of how Smartphones are being entwined in to our life and economy.

According to the article, 344727 old or used iPhones were sold on Ebay in 2010. This secondary market continues to thrive as more and more consumers go online to buy or sell through firms like Gazelle and NextWorth – so much so that the journal produced a “Blue Book” rating ( of the residual value of some of the well known brands as follows – iPhone 4 retains 60% of its original value, whereas Droid X holds only 42% and 4G EVO holds 44%. Blackberry Bold 9650 in comparison holds only 27% !! Apparently consumers can also trade their devices to get store credit in retail store like Best Buy. Just like the car industry, implications for the phone industry could be significant… high resale values could further enhance brand, as it does for automobiles with above average trade-in values.

Welcome to smartphone economy !!

No comments:

Post a Comment