Editor’s Note: Welcome to our weekly Reality Check column. We’ve gathered a group of visionaries and veterans in the mobile industry to give their insights into the marketplace.
Everyone in the wireless industry knows that smartphone sales have skyrocketed over the past five years, with no signs of a plateau anytime soon. Less well known is how that trend has shortened replacement cycles. For example, smartphone owners typically upgrade to a new model every 11-and-a-half months versus 18 to 24 months for feature phone owners. In fact, mobile phones have a shorter life span than any other type of major consumer electronics device.
Nearly 488 million smartphones were shipped worldwide in 2011, according to the research firm Canalys. Yet less than 1 percent of these smartphones are recycled. That means that in 2012, more than 463 million smartphones will wind up in a desk drawer or the trash sometime with the next year or two. This global reclamation problem will hit a fever pitch once we begin shipping a whopping 1 billion smartphones every year starting in 2016, as forecast by the NPD Group.
Feature phones, USB modems and other wireless devices have similarly low recycle rates. There are several reasons why these rates highlight a lost opportunity for mobile operators, device vendors and OEMs:
–Discarded smartphones, feature phones and other devices could be recycled to give OEMs an enormous, much-needed supply of scarce metals such as gold, tantalum and tungsten. An average phone contains about $1 in precious metals, mostly gold, silver and copper.
–These devices could be renewed and then resold at significantly lower price points, giving operators and distributors additional options for targeting price-sensitive demographics such as the credit-challenged and prepaid users.
–Because they’re more affordable, refurbished feature phones can be used to expand telephony in emerging and underserved markets.
–Refurbished smartphones, tablets and modems can be used to increase Internet penetration in third-world markets.
–Renewed mobile devices are attractive to enterprises that purchase them in large quantities for their employees or field workers.
The good news is that those opportunities don’t have to remain untapped. In early 2012, BrightStar, the CDG, ERecyclingCorps, ModusLink Global Solutions, Nexlink Communications, ReCellular, Sprint Nextel, Teleplan International and ValuTech Outsourcing founded the Device Renewal Forum. By creating a global standard that guarantees product quality via a certification mark, while making mobile device renewal convenient, secure, reliable and cost-effective, the DRF is able to extend a wealth of benefits to operators, vendors, OEMs and their customers.
Growing the market opportunity
Although a few large mobile operators and vendors, such as Apple and others, have programs to refurbish their own mobile devices, the DRF is fundamentally different because it is a global initiative that spans the entire device ecosystem. All of the operators, OEMs, collection agencies, vendors, distributors and reverse logistics companies (large and small) that become DRF members will use a standardized renewal process that is grounded on industry best practices to deliver renewed devices that appear, function and perform like brand-new devices.
As a result, consumers will associate the DRF certification mark with quality and use it to compare devices from multiple operators and vendors in their purchase decision. A global framework also frees operators and vendors from the cost of having to develop and maintain their own refurbishment programs.
The DRF also helps operators and vendors create and expand market opportunities, while protecting their brands.
From a consumer perspective, the DRF certification process ensures that the devices (of all technologies) meet the same high standards as their brand-new counterparts.
Without the DRF, operators, vendors, consumers and business users remain at the mercy of today’s Wild West refurbishment ecosystem, with its frequently less-than-thorough inspections and occasionally unscrupulous refurbishers. With the DRF, operators and vendors can be confident that their certified devices will provide a great user experience – the kind that protects their reputations and minimizes calls to customer care.
Certifying best practices and peace of mind
The DRF certification mark indicates that the device has passed a rigorous physical inspection and a battery of tests designed to ensure that the device will operate and perform like new. The devices will be wiped clean and delivered with the latest operating system, firmware and provisioning data. This process will give consumers confidence that their renewed device will provide a great experience right out of the box. Operators, meanwhile, will be able to rely on the certification process to ensure that renewed devices are 100 percent compatible with their networks and won’t cause problems.
To safeguard product integrity and quality, the DRF will audit the facilities where devices are renewed to ensure that:
–Quality, safety, health and environmental standards are met. As part of the certification, DRF certified facilities must comply with all of the relevant laws, regulations and directives that are mandated within their jurisdictions and hold certificates from the ISO and either WEEE, R2/RIOSTM or e-Stewards.
–Stolen devices are blocked from entering the renewal system. The DRF will provide a single, global framework of safeguards to keep stolen devices out of the renewal system. This system will thwart the current problem of valuable devices being stolen in one market and then sold to unscrupulous refurbishers in another market. This isn’t a minor issue: Mobile phones are becoming the most valuable form of e-waste, which is one reason why mobile phone thefts are an increasingly common crime worldwide.
–Incoming devices are completely wiped clean of all the original owner’s contacts, photos, apps and other personal information and content. Publicizing this step will encourage more consumers, enterprises and individual business users to submit more devices for renewal. User concerns about their data falling into the wrong hands are a major barrier to increasing the renewal rates beyond the current sub-1%.
–Batteries, cases, accessories and other hardware are recycled in an environmentally friendly manner. This includes compliance with country-specific regulations and industry best practices. When a device can’t be renewed, the DRF renewal and auditing processes ensure that PCBs and individual components are recycled, providing OEMs with a much-needed additional supply of scarce metals.
Device renewal is a trend that’s here to stay, but with renewal rates of less than 1%, it’s clear that the market and environmental opportunities have barely been tapped. The DRF’s mission is to accelerate the growth of the device renewal market. Its initial goal is to double the number of renewed devices sold around the globe within the next five years. By doing so, the DRF will help grow the wireless industry, reduce costs, minimize e-waste and conserve the raw materials, scarce resources and energy used to sustain a manufacturing base that is producing nearly 2 billion wireless devices per year.
