Used Electronics: Recycling the Lessons Learned in Mature Markets

Used Electronics: Recycling the Lessons Learned in Mature Markets

As the number of mobile devices increases more creative end-of-life strategies for used electronics are needed
As the number of mobile devices increases more creative end-of-life strategies for used devices are needed

Apple is developing a robot called Liam that disassembles used iPhones, and extracts materials such as platinum and silver for recycling. As the number of consumer electronic devices continues to proliferate, look for more innovative approaches to end-of-life (EOL) strategies for these products.

Lisa Jackson, Apple’s Vice President of Environment, Policy and Social Initiatives, introduced the Liam project last month at an Apple Special Event in Cupertino, CA. At the event Apple CEO Tim Cook celebrated a company milestone: more than one billion Apple devices in use around the world today. Cook emphasized how the milestone underscores the impact of Apple’s products on the world – and the company’s responsibility for environmental stewardship.

The same can be said for the consumer electronics industry generally. Take, for example the market for wearables electronics. In a recent study Gartner forecasts that 274.6 million wearable electronic devices will be sold worldwide in 2016, generating revenue of $28.7 billion.

In a recent column in Supply Chain Management Review, Daniel W. Steeneck, MIT CTL Postdoctoral Associate, explained how the wearables industry needs effective EOL strategies as it grows rapidly, and governments tighten regulations covering the handling of used electronic products.

Research underway at MIT CTL suggests that wearables companies should learn from established markets – including smartphones – if they want to develop innovative ways to recover the value of used parts and products, according to Steeneck.

Historically, cell phones were recovered and either resold or underwent material reclamation.  As the rate of technological change or clockspeed (the term coined by MIT Professor Charles Fine in his book Clockspeed: Winning Industry Control in an Age of Temporary Advantage) of smartphones slowed, a strong market for spare smartphone parts developed that did not exist before.  However, more recently reclamation has been rendered unprofitable by falling commodity prices. As a result, reselling recovered parts has become profitable, and cell phone recyclers have shifted their EOL strategies.

The factors that determine the optimum approach to recovering used products fall into four main categories: the costs and revenues involved, the nature of the market, product design and product pricing. Given the expected proliferation of wearables products such as Fitbit and AppleWatch gadgets, what should be done with these (currently) high clockspeed products when they reach the EOL phase?

Steeneck believes that the cell phone market, which in the past has suffered from relatively low recycling rates for used devices, offers some clues.

Wearables manufacturers should design first-generation models for easy disassembly with value recovered through material reclamation (because such parts will have a minimal durability). This might require more collaboration between trading partners early in the design process. And they should create collection systems designed for material reclamation and resale to secondary markets. Potential recovery channels include:

  • Trade-in programs offered by manufacturers or retailers.
  • Online recyclers offering to purchase old wearables.
  • Donation of wearables as medical devices.

However, these channels require the consumer to voluntarily return the product. A truly effective closed-loop supply chain for wearables (or any product) can only be realized if the seller or OEM retains control of the lifecycle of the product.

Again, wearables companies can learn from established markets where companies have achieved this level of control with specially designed sales programs. Examples include “power-by-the hour” programs for aircraft engines, managed print services adopted by Xerox, and, more recently, T-Mobile’s Jump cell phone leasing offering. Apple customers have the option of returning their old smartphones to the company for recycling.

If the wearables industry learns from past experience and develops innovative EOL solutions that are aligned with changing market conditions, it will capture a huge opportunity to redefine EOL operations and derive significant value from used products.

 

 

 

 

 

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