My phone is giving up the ghost so I've been looking at new ones and color me intrigued, I thought refurbished phones would be cheaper than buying new, but wow is that not the case?
Why is that?
Apple is successfully segmenting the market, and this year added a new level on top of the stack. So right now you can buy, new from apple, the following phones:
X (2017, A11 processor)
8+ (2017, A11)
8 (2017, A11)
7+ (2016, A10)
7 (2016, A10)
6s+ (2015, A9)
6s (2015, A9)
SE (A9) (they keep upgrading this model, so it's not attached to a year)
This means a consumer can buy a new phone, from apple, at any price point from $349 to $1,149.
Further, consumer demand is strong enough for the entire range that they are essentially setting the price. So a phone that's 2 years old, the iPhone 6s, is going new for $449. This means that used in good condition it's probably well over $300.
Further, they support these phones. You can upgrade to the latest operating system and run the latest apps on a phone that's 3 years old (iPhone 6 and 6+), though the experience is no longer fast, smooth and buttery because the newest OS is designed for processors 3-5 times faster than the A8 in that phone (I just upgraded from a 6+, and while it's usable it was annoying to have to wait. I would have kept it on iOS 10 if I could have and still received security updates).
If you buy most 3 year old android devices, you'll find that the OS is old, upgrading it requires specialized knowledge and a willingness to live with minor inconveniences. App developers know this and develop for very old versions of android, but you'll still miss out on some newer apps that require newer OS features. You can get a few phones with good long term support, but they are more expensive.
This is what's propping up the used market - long term support, a huge array of devices to segment the market, and a public perception of value.
All that said, I reconciled the high cost of the phone years ago when I realized I was paying far more for the service than the device, so getting a device that made the most of the service was a benefit for me. That coupled with the fact that I needed to have at least one of each form factor device for client work justifies (in theory, we'll see if it pays off) the high cost when a new form factor comes out (like the X).
Also I save up $50 a month as a business expense just to buy phones so I never have to go into a contract or leasing arrangement again.
It also means that you should upgrade and sell your old phone as a used device at least every three years. After that it loses value significantly.
The reality is that unless Google, qualcomm, intel, or someone else really takes up the battle against Apple it's not going to change. Apple's A11 is nearly 50% faster than the Snapdragon 835 (chip used in the latest and greatest Android devices released this year) in multi-core tests, and in single core tests it's twice as fast. This doesn't necessarily translate directly into better user experiences, but it does matter (particularly to bleeding edge app developers) to the market and maintaining that lead is a big part of Apple's strategy.
So blame Apple. They are extracting the most money they can from their customers, and selling and supporting such a broad range of new and old phones that the used market is propped up.
I suspect they've jumped the shark this year though. The X isn't receiving the huge demand they'd prefer (only a 2-3 week wait right now), and they know that the 6 and 7 are right in the "I guess I can spend this much on a phone" sweet spot for their market.
The 8 and X are really them going after the wealthy - again, market segmentation. They wouldn't sell the SE and 6 unless they were moving millions of them a year, and they are.