Wireless carriers are giving customers an incentive to shop around for less expensive smartphones.
As operators abandon contract plans and the device subsidies that go with them, they're giving customers a reason to look more closely at how much it costs to buy a smartphone. These new plans require that consumers buy their phone at full price. Customers still have the option to spread out the cost of a new device, but in the end they must pay the full retail price tag. This is leading to savvy shoppers looking for deals.
But is it even possible to find a really great deal on a new smartphone these days? That's the question one reader asks, as he hunts for a bargain.
I was wondering if there is a place to find new -- not refurbished -- smartphones on clearance. I'm assuming the major cell phone companies likely don't sell out of all their smartphones before they're replaced by newer models. What happens to those older models? Is there any way I can buy a model that's a year or two old but still brand new at a big discount over newer models? I don't need cutting-edge technology; just something that works fairly well.
This is a great question. As wireless operators step away from two-year contracts with device subsidies and move toward plans where customers must buy their own devices at full price, there's an incentive for subscribers to shop around for the best deal they can find on new phones.
As you're well aware, brand-new smartphones, especially the most popular models, are expensive. For example, Apple's iPhone 6 starts at $650 and the larger iPhone 6 Plus starts at $750. Samsung's Galaxy S6 Edge+, which has a curved edge, sells for $768. So it makes sense to try to find deals where you can.
Unfortunately, for the most popular brands and models, like the iPhone and Galaxy phones, such deals are hard to come by, if they exist at all, said Chris Sullivan, CEO of Gazelle, a site that accepts trade-ins on old devices and sells refurbished smartphones. The reason why, Sullivan said, is that since release cycles have gotten fairly regular, with major updates coming once a year, wireless carriers are better at gauging demand and managing inventory.
"The wireless operators have gotten very good at planning," he said. "There just isn't a lot of overstock of popular phones. That's why we see a big opportunity in selling used devices."
If there is any excess inventory, wireless operators will discount the devices themselves first. That's what happens with last year's iPhones and Samsung devices, which are usually discounted by about $100 when new devices come out. Carriers may also offer promotions to sell through their inventory. Whatever's left after that is used to fulfill insurance claims. Third-party companies that handle insurance plans for wireless devices buy new and used inventory so they can replace devices for customers whose phones have been lost, stolen or damaged.
As a result, Sullivan said, older versions of the most popular phones almost never make it to a discount distributor that would sell them to consumers. But, he said, consumers might be able to find deals on less popular brands or models. For instance, older Nokia and Microsoft Windows Phone smartphones or LG and Sony devices might find their way to a discounter. You might be able to find small volumes of these devices on sites like Overstock.com, Amazon or eBay.
"The one place carriers might miscalculate demand is for newer phones that aren't from a popular brand," Sullivan said.
Heart set on an iPhone or Galaxy phone?
Timing is your best strategy for finding a good deal on more popular brands of smartphones. Whether you want a used device or a new one, you're likely to find good deals on devices right before and right after a new version is announced. As luck would have it, this is the perfect time of year for Apple fans to look for deals on older iPhone models. Apple has already sent invitations for the new iPhone's big unveiling on September 9. This means that people who want the latest and greatest smartphone from Apple will be thinking about upgrading once the latest version is released later in September.
In anticipation, carriers may start offering discounts on older versions of iPhones. After the new iPhone is announced, you can guarantee that Apple and wireless carriers will discount older versions. Usually the previous year's model is $100 cheaper than the newer model. And iPhone versions that are older can be discounted even further.
Sullivan points out that this is also a good time to trade in old devices and buy refurbished phones. Customers who want to upgrade to the next iPhone will likely be trading in their current iPhone, so there will be a higher inventory of "newer" older phones.
None of the carriers would go on record about where specifically their excess smartphones end up. AT&T provided this statement:
"AT&T can utilize and reuse excess phone inventory, buy-back devices, and device returns in a variety of internal and external distribution channels. Any devices that are not reused internally or externally are responsibly recycled. Prior to any device being reused or recycled, a rigorous and intensive process completely removes any previous customer data."
But a representative from another carrier, who didn't want to be identified, confirmed that most unused new devices are used to fulfill insurance claims.
The bottom line
It's really hard to find big discounts on the most popular smartphones. If you time it right, you can usually get $100 or $200 off the original price tag on an older model iPhone or Samsung phone. But you won't likely find a 1- or 2-year-old Samsung Galaxy smartphone or iPhone for $300 or less in brand-new condition.
That said, you don't have to spend more than $300 on a smartphone if you don't want to. Refurbished phones are still an option if you must have the most popular brands. Otherwise, you can check Overstock.com, eBay and other websites that sell excess merchandise for less popular brands like Nokia, LG or Sony. A third option is to look for devices that are being made specifically for this price point. Motorola offers several inexpensive phones, as do several Chinese manufacturers.
Hope this was helpful, and good luck!
Ask Maggie is an advice column that answers readers' wireless and broadband questions. If you have a question, I'd love to hear from you. Please send me an e-mail at maggie dot reardon at cbs dot com. And please put "Ask Maggie" in the subject header. You can also follow me on Facebook on my Ask Maggie page.