Ben Evans works through some of the implications of Apple’s subscription iPhone plan:
So what happens to the old phones? When you take that upgrade, you have to hand in your old one. They go into the secondary market, which is rather the dark matter of the industry – we know it must be large and we can get some sense of that from survey data, but we don’t have a solid number. One illuminating data point is the fact that for the last several years the number of iPhones that seems to be in China (if you look at data from companies like Baidu) has been rather larger than the number of iPhones that Apple’s financial reporting imply could have been sold there. Second-hand closes the gap.
If everyone hands their iPhones in after year one to get a new one, there will be a whole lot of used iPhones. Where do they go and how does that alter the market? Interesting stuff.