Apple was caught last year selling Apple Certified refurbished hardware on eBay using the pseudonym Refurbished-Outlet. Allegedly.
The prices and details of these products were generally the same as refurbished products sold on the apple.com site. The products come with a one-year warranty and mobile devices contain a new battery.
But this week it emerged that Apple is lowering the prices on eBay, sometimes by quite a bit. For example, Apple normally charges $999 for a refurbed MacBook Air with 128 GB. But that same system with the same Apple inspection and one-year warranty went on sale in the eBay store for $899. Prices on other hardware products were slashed similarly.
(In addition, we learned, the company as been apparently working with “power sellers” on eBay to sell Apple hardware. For example, until they ran out of the 500 units put up for sale of 13-inch MacBook Pros selling for $999. These are new devices, not refurbished, and Apple is probably using the “channel” to clear out inventory.)
It seems to me that Apple is working behind the scenes to experiment with different models for selling refurbished and excess inventory. I wouldn’t be surprised if Apple was also trying other channels for doing the same thing that we don’t know about. And I also wouldn’t be surprised if refurbished gadgets vanished from the Apple site altogether, and for those items to be sold in the darker alleys of the Internet (like eBay) exclusively instead.
But I think there’s a ginormous opportunity here for embracing “used” in a big way — and it’s something only Apple could pull off.
Meanwhile, a new Apple patent has recently surfaced that describes a method for the transfer, sale and “gifting” of digital content from one user to another, content such as eBooks, songs, videos, games and, presumably, software. (Amazon has a similar patent.) Essentially, the patent involves a way to manage digital rights, rather than the transfer of files — how do you grant person B the rights to the license for software originally purchased by person A — and subsequently deny the rights to person A.
We tend to associate Apple with brand-new stuff, not used. And Apple likes it that way (hence the pseudonymous sales on eBay). Yet the resale of refurbished hardware is necessary for Apple. And a method that enables people to exchange digital content is both a good idea and may become necessary when other companies (like Amazon) standardize the practices at some point in the future.
It has also become wisdom of the conventional variety that Apple will release a cheap phone using some kind of polycarbonate (i.e. plastic) instead of aluminum. We’re told that Apple needs to come out with a cheap phone to compete with the low-margin business where competitors are making no money, rather than sticking with the sweet spot of the market that brings Apple the majority of industry profits.
As you can tell, I’m skeptical about the predicted cheap iPhone. In fact, I’ve argued that Apple should really go in the other direction with a more expensive iPhone.
Apple has other problems. For example, the company is constantly under attack from environmental groups for the alleged wastefulness of its products and the toxicity of the materials used to manufacture those products.
And Apple faces never-ending scrutiny about the conditions of factory workers in China that make our iGadgets.
Why Apple Should Get Used
So what do all these things have in common?
To me, the solution to many of Apple’s challenges is for the company to continue to innovate in the world of used.
In other words, Apple should figure out how to build hardware that’s even more durable and indestructible than it’s already very durable designs. The goal should be for iMacs, MacBooks, iPads, iPhones and iPods to last as long as humanly possible. Then, Apple should continue to cultivate the re-sale, re-re-sale and re-re-re-sale of Apple gadgets to serve the low end of the market.
From a business perspective, this could be a huge boost to Apple’s bottom line. Apple should be able to make a few hundred dollars on the brand-new iPhone, a couple hundred on the first re-sale, a hundred on the third sale, and maybe $50 on the fourth sale. I’m making these numbers up, obviously, but you can see how profitable this could be — making $1,000 on the total life of a single iPhone, but having to pay for its manufacture only once.
This also helps Apple’s brand. A used iGadget is still a super high-quality premium device. I still use my used iPhones and iPad and they’re in perfect condition. I bought my MacBook refurbished, and THAT’s still in perfect condition. My brand estimation based on the user experience of these used products is very high — much higher than if Apple started making Samsung-like plasticky devices, which would erode Apple’s brand catastrophically.
Personally, I have never purchased and would never purchase used computer stuff except for Apple’s. Both my iMac and my MacBook Pro were both purchased used. When I was a Windows user (from about 1990 to about 2010) I would never have dreamed of buying a used Dell or Sony or HP desktop or laptop.
But I’m very happy buying used Apple stuff. It’s still amazing and feels perfect, and I’d rather spend the money on higher specs, such as additional memory or faster processors, than a newer, less capable machine for the same money.
Selling a lot more used devices would be a massive improvement to the environment.
You can recycle all you want — ultimately “recycled” devices really end up poisoning entire communities in destitute villages in China, India or Africa, where giant piles of electronics are picked through unsafely for precious metals, often extracted with fire that creates toxic air pollution. The majority of the materials and chemicals end up in some giant pile, ultimately to poison nearby or underground water supplies.
The only environmentally friendly consumer electronics product is the one that’s never manufactured. Selling a used phone, for example, not only spares that phone from the toxic junk pile, it prevents a cheap phone from being manufactured.
Every re-sale of a device theoretically prevents another device from being built.
And if Apple can sell more but manufacture less, the pressure on sweatshop manufacturing goes down that much more, improving Apple’s human rights record, if you will.
I don’t have all the answers. Only Apple can work to understand the constraints, costs and challenges of radically boosting and facilitating the re-sale of Apple hardware. But it seems to me that there’s an approach here that Apple is in a very good position to pioneer.
Just imagine if Apple products could be built, sold and re-sold in such a way that they could last for 15 years, instead of the 3-5 years or so that they currently last. Apple could make more money on each device, and also manufacture fewer devices to help the environment and reduce manufacturing woes.
Meanwhile, implementing the “used” digital content patent just makes good business sense. You’re more likely to buy digital content if you know you can sell it. And you’re more likely to try something new if you can buy it “used” at a discount. And, of course, the ability to give digital content easily as gifts will do nothing but increase sales.
I’d love to see Apple go big on used hardware and software sales. How about you?
(Picture courtesy of the SFU E-Waste Campaign)