A Circular Economy for Smart Devices Opportunities in the US, UK and India Contents
Total Page：16
File Type：pdf, Size：1020Kb
A circular economy for smart devices Opportunities in the US, UK and India Contents Summary 2 1. Introduction: good devices, bad systems 3 2. Six circular economy models 6 3. Market opportunities in the US, UK and India 21 4. The benefits of a circular economy for smart devices 26 5. Annex: methodology 33 1 Summary Smartphones, tablets and laptops have analysis reveals that a two year old flagship of consumers without a smartphone, who moved from the fringe of computing to the smartphone can be more attractive than tend to be older and less well off. mainstream in just five years. Sales of these today’s mid to low tier best sellers. It shows smart devices exploded as consumers saw that repair makes economic and The saturated market for laptops, by the benefits of seamless connectivity, and environmental sense for at least four years, contrast, would be better suited to circular were drawn to the simplicity of new user and up to seven in some cases. And it economy models which keep laptops with interfaces. In many cases, the environment demonstrates that keeping a mobile phone a single user for longer. benefited too, as energy efficient devices in use for just one extra year cuts its displaced older computers, and new lifetime CO2 impact by a third. In India, low labour costs and more mobile-enabled cloud systems became standardised hardware in cheaper devices platforms for efficiency across the economy. Just as there isn’t a single business model make harvesting parts a viable strategy. for smart devices, there isn’t a single route Similarly, India’s existing network of small Unfortunately, this isn’t the whole story. to a circular economy. Instead, this report electronics repairers would favour a Smart devices are smart, but the physical sets out six circular economy business decentralised, DIY repair approach. systems they end up in are not: 89 per models that companies in different parts of cent of mobile devices in the US were the supply chain can experiment with. There are huge circular economy thrown into landfill in 2010, even These range from software only changes to opportunities for the makers of though the resources they contain mean hardware redesign to enable existing parts smartphones, tablets and laptops. With it is economically sensible to recycle to be used again. Even small design five billion potential customers seeking them. Many millions of usable devices adjustments can make a huge difference: access to smart devices, companies that are left forgotten in drawers once their replacing a screen on the iPhone 3GS takes reduce their costs and environmental owners upgrade, despite a robust 15 minutes; on the less modular HTC One, impact through circular strategies will second-hand market. This wastes perfectly it takes 90 minutes. prosper. The good news is that the tools good devices, frustrates consumers and to do so, as we outline in this report, are harms the environment. This report analyses US, UK, and Indian already at hand. markets, identifying the most receptive But technologists don’t have to let their consumers for the different circular hard work end up as waste after a few short economy models. In developed markets like years. A circular economy for smart devices the US and UK, second-hand phones could would keep them in use for longer. This prove attractive to the roughly 40 per cent 2 1 Introduction: good devices, bad systems The technologists that created mobile customers around the world, increase Valuable resources are being lost1 computing started with a gloriously blank brand loyalty, and cut manufacturing costs canvas. They used their creativity to design and risks. Doing so would also help to cut elegant, useful, and universally desirable electronic waste, carbon emissions and new devices and systems. Their products are resource use. carried in billions of back pockets and bags 89% across the wealthy world, and they are The circular economy is already aiming to sell to the next five billion making money people, all of whom are eager to benefit A circular economy for consumer from the information and communication electronics is already here. It has developed that the internet provides. from the bottom up: the value of Apple devices sold on eBay in the US in 2013 was But these ingenious people have sent their nearly $2 billion.2 NextWorth estimates the devices out into a world whose physical potential value of the US smartphone trade systems are designed with none of the in market in 2014 to be over $3 billion.3 elegance of their digital counterparts. The result is that old but usable laptops, tablets And it’s not just smartphones. WRAP and smartphones are ending up in landfill estimated in 2013 that the value of two to or languishing in drawers, where they sit three year old laptops in the UK was £720 89 per cent end up in landfill ...while millions are discarded until they reach technological obsolescence. million and two to three year old tablets The US threw away 141million mobile devices 28-125 million phones languish unused But clever devices deserve better than to were worth £90 million after any collection in 2010, 89 per cent of them went to landfill in the UK alone. This means for every phone 4 become waste after just a couple of years of and repair costs were taken into account. in use, up to four sit in drawers unused use: electronics and the cloud services that Even when devices are no longer usable they connect to can be the source of the they have value: the market for IT spares solution. and components is estimated to be greater than £10 million a year in the UK alone.5 This report shows how companies across the mobile electronics supply chain can adopt a circular economy model to make money out of old devices, attract new 4 The used device market is growing fast, consumers to recover more of the devices Market predictions for traded-in and used smartphones to 2018 with estimates of global used smartphone that would otherwise end up scrapped or sales expected to rise from 53 million to stored away. 257 million between 2013 and 2018, driven by a doubling of trade-ins in the But it is not just about gaining more value. Trade-in Used US.6 But these big numbers hide far greater Manufacturers, software providers, retailers potential: globally, only 12 per cent of and carriers would benefit from building smartphone upgrades involved the old circular economy thinking into their Upgraded 53 million 257 million smart phones used used device being sold or traded. business plans because it is popular with either traded in smartphone smartphone customers, helps to mitigate business risks, or sold sales sales This is changing the market. Credible and dramatically cuts the environmental projections suggest that eight per cent of impact of devices: just keeping a new sales will be cannibalised by reuse in smartphone in use for an additional year 7 50% 2018. Rather than seeing these trends as a cuts its CO2 impact by 31 per cent. threat, forward thinking companies could 25% see them as a new opportunity. In this report we set out these benefits in detail, but if they are to be realised, They wouldn’t be alone: a growing number companies will have to experiment with of independent trade-in businesses like new, circular economy models. 2013 2018 2013 2018 Gazelle in the US and Mazuma in the UK are competing for old mobile devices on We outline six models in chapter two (see In chapter three we provide a more the ease, trust, and reliability of their page six), demonstrating how companies detailed analysis of the US, UK and service. Manufacturers are also beginning can adapt software, hardware and business Indian markets, to show how circular to enter the market, with Apple offering a models for a circular economy. They show models for smart devices meet the trade-in service for iPhones and iPads in the the changes companies could make, which demands of their consumers. UK, US and India, and Samsung running parts of the supply chain might benefit one for smartphones in India. But carriers, most and which consumers are likely to be retailers and software providers also have an most receptive. opportunity to grow the total size of the market by using their relationship with 5 2 Six circular economy models Three types of intervention There is no single model for a circular the supply chain than others. They are Hardware Software Business model economy in consumer electronics. The developed with information about why supply chain for mobile devices is complex, different supply chain actors might benefit No redesign No redesign No redesign highly varied and still evolving. from a particular model, and also which consumers might find them attractive. Battery and screen Leasing, eg device Simplified second life OS Companies like Apple and Microsoft are replacement upgrades on schedule vertically integrated across hardware and The overall aim is to provide an interested Cosmetic modularity (eg Hardware diagnosis Buy back software; Samsung is even more tightly company with enough information to Nokia’s swappable shells) integrated across hardware, but largely experiment with different ways of Full modularity Servitisation, eg reliant on others for software; Google is becoming more circular. Performance diagnosis (eg Phonebloks) Chrome OS mostly a software company but is increasingly influencing hardware design; The six models are: Durability Collection prompting and carriers, like O2 in the UK or AT&T in the US, provide services but also 1. Software led longevity Part compatibility Driver standardisation occasionally produce hardware.