T R E N D R E P O R T: Q 1 2 0 19

State of Mobile
Device Repair
& Security
June 2019
Table of Contents

Introduction 3

About the Data Powering the Report 3

Key Trends & Insights 4

Rapid Changes in the Second-hand Mobile Market 4

iOS Diagnostic Issues - Retailers vs. Processors 6

Android Diagnostic Issues - Retailers vs. Processors 7

Android Manufacturers Ranked - Mobile Processors 7

Diagnostic Issues by iOS Device Model - Mobile Processors 8

Best and Worst-Performing Devices Coming into Retail Stores 9

Most Popular Diagnostic Tests & Average Test 11

Duration Times

Average Reset / Erasure Times & Top Erasure & 12

Wiping Standards Used

5G’s Impact on the Second-hand Mobile Market 12

New Features Could Lead to Higher Values, 13

Older Phones Flooding the Market

Conclusion 13

About Blancco 14

2 State of Mobile Device Repair & Security | Trend Report: Q1 2019 | June 2019
Introduction

Mobile retailers, resellers, 3PLs, carriers and other mobile organizations are in a
constantly changing market that warrants careful attention. Slow processing times,
poor customer service and inefficient device fixes can leave consumers unhappy.
If these businesses don’t want to be outpaced by their growing list of competitors,
they must keep up with the latest trends, while also embracing effective diagnostics,
erasure and grading solutions to provide the best customer experience possible.

In this report, you’ll learn more about the current state of the mobile market and get an
inside look into key mobile metrics to help you address erasure and diagnostic issues
across a wide array of Android and iOS devices.

Whether you work for a mobile processor, mobile retailer or sit somewhere else in the
mobile ecosystem—there’s something here for you.

About the Data Powering the Report

The information contained in this report provides an inside look at Blancco mobile
diagnostic and mobile erasure data collected from millions of iOS and Android mobile
devices across the globe. These devices were brought to hundreds of mobile carriers and
device processors for diagnostic tests and mobile erasure in North America, Europe, Asia
and Australia from January 1, 2019 to March 31, 2019. The report is also supplemented by
information from various external sources.

Diagnostic testing, data clearing (factory reset) and data erasure were performed using
Blancco Mobile Solutions, and the associated reports were stored on the Blancco
Management Console—a central repository for accessing key data onsite or in the Cloud.
Mobile retailers and processors can leverage this information to address audit controls,
provide a better customer experience and explore and implement best practices.

3 State of Mobile Device Repair & Security | Trend Report: Q1 2019 | June 2019
Key Trends & Insights

Rapid Changes in the Second-hand Mobile Market

Recently, the second-hand mobile market, which has seen rapid growth for the past few
years, took a turn no one expected. According to the latest research from Counterpoint’s
Refurbished Smartphone Tracker, the global refurbished smartphone market slowed to
1 percent year-over-year growth in 2018, or around 140 million units.

Counterpoint points to the 11 percent drop in new smartphone sales in countries

such as the U.S. and China for this slowdown, leading to fewer devices flowing into the
secondary market. The organization notes, “However, this drop was partially offset by
improvements in the secondary market’s ecosystem of collection, grading, repairing,
and online/offline selling.” Counterpoint also highlights key areas of growth during this
period, including India at 14 percent growth year-over-year. Mobile grading was pointed
out as a key area of tension for this market—one that must be standardized across the
industry to build consumer trust.

Figure 1.

Key Country and Regional Refurbished Handset Growth Rates [2018]1

100+7562+ 50+ 50+ 40+ 30+ 30+ 34+

14%

9%
7%
4% 4%
2%
-4% -8% 1%

India LATAM EU SE Asia Africa Japan U.S. China Total

Despite these numbers, mobile trade-in programs continue to grow. HYLA data shows
that mobile device trade-in programs returned more than $2.2 billion to consumers in
2018, due to increased efforts to bring awareness to the programs by retailers, OEMs
and carriers.2

40+4143
+
Figure 2.

Money in Customers Hands: Amount of Dollars Returned to U.S.

Customers Through Trade-In and Buyback Programs1

CAGR: +4%
$2.156B $2.266B
$2.101B

2016 2017 2018

1 https://www.counterpointresearch.com/global-refurbished-smartphone-market-growth-slows-1-2018/
2 Sources: HYLA Mobile; HYLA Mobile

4 State of Mobile Device Repair & Security | Trend Report: Q1 2019 | June 2019
Key Trends & Insights

Figure 3.

2017 – 2022 Shipment (M) with Growth (%)

(M) (%)

Total: 1,977.6
2,500 0.4
Total: 1,828.3 -0.1
2,000 -0.6 Selected Segment
-1.1 Growth Rate
1,500 1,465.5 1,420.6 1,457.0 1,504.0 1,544.8 1,574.4 -1.6
▼ Feature Phones CAGR: -13.1%
-2.1
1,000 -2.6
▲ Smartphones CAGR: 1.4%
-3.1
500 -3.6
-4.1
0
512.1 476.7 400.3 340.1 289.7 253.9
-4.6 Total Market CAGR
2017 2018 2019 2020 2021 2022 -1.6%
Feature Phones Smartphones Total Growth (%)

Note: Chart legend should be read from left to right. Source: IDC, 2018

As for the overall global mobile market size for new smartphones, International Data
Corporation (IDC) reports in its Q4 2018 Worldwide Quarterly Mobile Phone Tracker
that 4.1 percent fewer smartphones were shipped versus the same quarter in 2017.
IDC predicts that “by 2022, total mobile phone shipments will reach 1,828.3 million
units worldwide, resulting in a CAGR of -1.6% from 2017 to 2022.” This marks a
significant decrease from previous predications. The organization also predicts the
average mobile phone selling price will increase to $328.93 by 2022, with about
6 percent growth each year between 2018 and 2022.

Figure 4.
Worldwide Mobile Phone Shipments, 2012-2022
Comparison of September 2018 and December 2018 Forecasts

2,000

1,950

1,900

1,850
(M)

1,800

1,750

1,700

1,650

1,600

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

December 2018 forecast

September 2018 forecast
Source: IDC, December 2018

5 State of Mobile Device Repair & Security | Trend Report: Q1 2019 | June 2019
Key Trends & Insights

iOS Diagnostic Issues – Retailers vs. Processors

Retailers often see mobile devices early in the device lifecycle, though they may also
facilitate trade-in at end-of-life. Meanwhile, mobile processors see devices that have
already been traded-in or sold before they are passed on to their second or third
owners. Let’s compare the most common diagnostic issues found in iOS devices
coming in to both of these types of organizations.

Notable changes from last year include the stark increase in Face ID tests (implemented
within the last year). It’s encouraging to see that despite the fact this feature was
recently added to iOS devices, it’s failing in less than 1 percent of devices tested.

Figure 5. Figure 6.

Top 10 iOS Performance Issues – Mobile Processors Top 10 iOS Performance

Issues – Mobile Retailers
Issue Percentage Change Year-Over-Year

2626+ 25+ 11+ 4+ 3+ 3+ 3+ 2+ 2+

Battery Wear 3.7% 0% Camera 26.4%

Screen 2.5% -12.7% Silent Key 26.1%

Headset 1.6% 0.5% Camera Flash 25.5%

Fingerprint 1.6% 36% USB 10.5%

Proximity 1.1% -24.9% Battery

4.2%
Charging

Bluetooth 0.8% 1.3% Headset 2.9%

Face ID 0.8% 3,032.5% Power Key 2.4%

Rear Camera (Customized) 0.8% -1%

Home Key 2.3%

Gyroscope 0.8% -13%

Battery Wear 1.7%

Front Camera (Customized) 0.7% -2.1%

Proximity 1.5%

Front Video (Customized) 0.6% -4.5%

Now let’s dive into the retail data. As we’ve noted before, devices in retail environments
will always show a higher level of diagnostic issues because customers have already
self-identified issues with these devices. Because of this, you’ll see there’s quite a large
gap in the issues rate across retailers and processers.

Both processors and retailers saw iOS devices come in with high levels of battery
performance issues. Battery wear made the top ten list for both processors and retails
at 3.7 percent for processors and 1.7 percent for retailers. Battery charging also made
the retail list of top issues, at 4.2 percent.

6 State of Mobile Device Repair & Security | Trend Report: Q1 2019 | June 2019
Key Trends & Insights

Android Diagnostic Issues – Retailers vs. Processors

Now let’s look at common diagnostic issues on Android devices. Due to the wide array
of Android devices tested, none of the top five tests overlap across processors and
mobile retailers, despite the fact they have been known to do so in our past reports. It’s
interesting to note that the issues retailers are seeing most in Android devices today
could very well carry over into the second-hand mobile market in the next couple of
years as customers sell or trade in those devices.

Figure 7. Figure 8.

Top 5 Android Performance Top 5 Android Performance Issues – Mobile Processors

Issues – Mobile Retailers
Issue Percentage Change Year-Over-Year
2414+ 108+ 7
Back Camera 12.2%
Screen 2.1% 0.2%
Battery
7.4%
Charging LCD Color 1.7% -7.7%
Camera Flash 5.4%
Screen Damage 0.9% 10.2%
Touch 4.1%
Barometer 0.5% -13.5%
Speaker 3.8%
Headset 0.4% 5.2%

Android Manufacturers, Ranked – Mobile Processors

Android devices come in many different shapes, sizes and levels of quality across
many different manufacturers. Let’s take a look at how these manufacturers stack up in
terms of performance. Only manufacturers that made up at least 0.5 percent of overall
devices processed were included in this analysis.

Figure 9.

Top 5 Worst-Performing Android Manufacturers – Mobile Processors

Percentage of # Devices
Diagnostic
Manufacturer Overall Devices Processed - Change %
Issues Rate3
Processed Year-Over-Year

Google 23.1% 0.5% 19.1%

Sony 10.1% 1.6% -35.5%

LG Electronics 9.3% 3.3% 30.3%

Samsung 9.7% 21.7% -20.5%

Huawei 8.5% 1.7% -10%

3 Percentage is against the total number of devices tested
from the same manufacturer.

7 State of Mobile Device Repair & Security | Trend Report: Q1 2019 | June 2019
Key Trends & Insights

Figure 10.

Top 5 Best-Performing Android Manufacturers – Mobile Processors

Percentage of # Devices
Diagnostic
Manufacturer Overall Devices Processed- Change %
Issues Rate4
Processed Year-Over-Year

OPPO 3.2% 0.7% -30.1%

Xiaomi 3.5% 8.9% 51.1%

OnePlus 3.9% 0.6% -18.6%

Lenovo 4.0% 2.0% 36.3%

Sharp Corp. 5.2% 0.7% -41.7%

Google, Sony and LG were at the top of the list of manufacturers that showed device
issues. Twenty-three percent of Google devices coming into mobile processors
showed at least one diagnostic issue. Sony followed at less than half of that number
(10.1 percent). Best-performing Android manufacturers include OPPO at a diagnostic
issues rate of only 3.2 percent and Xiaomi at 3.5 percent.

Diagnostic Issues by iOS Device Model – Mobile Processors

Now let’s uncover how iOS devices coming into our customers’ mobile processing
warehouses performed by model. Only devices composing at least 1 percent of total
iOS devices tested are included in this summary.

Figure 11.

Top 5 Worst-Performing iOS Models

Percentage of Models Tested Percentage of Total iOS

Model
with Diagnostic Issues5 Devices Tested

iPhone 5c 23.4% 1.0%

iPhone 6 21.1% 10.1%

iPhone 5S 17.7% 2.2%

iPhone 6S Plus 16.5% 3.6%

iPhone SE 10.6% 2.2%

4 Percentage is against the total number of devices tested from the same manufacturer.
5 Percentage is against the number of devices tested of the same model.

8 State of Mobile Device Repair & Security | Trend Report: Q1 2019 | June 2019
Key Trends & Insights

It’s no surprise that the older iOS models were some of the worst performing, with
the iPhone 5c and 6 generations showing the most models flagged with at least one
diagnostic issue.

Figure 12.

Top 5 Best-Performing iOS Models

Percentage of Models Tested Percentage of Total iOS

Model
with Diagnostic Issues5 Devices Tested

iPhone XS 1.5% 5.6%

iPhone XR 1.7% 2.2%

iPhone 8 3.2% 3.3%

iPhone X 3.5% 6.9%

iPhone 6 Plus 3.6% 2.1%

The exception is the iPhone 6S Plus, which ranked in the top five best-performing
models, with only 3.6 of models tested showing at least one diagnostic issue. The
iPhone XR, the budget-friendly version of the iPhone X model, interestingly ranks
higher than its more expensive iPhone X counterpart (though slightly behind the
most expensive model of the group, the XS), showing that there might not much
of a difference in quality, despite the differences in price tag.

Best- and Worst-Performing Devices Coming into Retail Stores

Blancco’s global retail customers are tasked with keeping customer satisfaction high,
while also earning profits. To do so, they must diagnose customers’ self-identified
device issues quickly and accurately, either onsite or via an app. Only devices
composing at least 1 percent of total Android devices tested are included.

5 Percentage is against the number of devices tested of the same model.

9 State of Mobile Device Repair & Security | Trend Report: Q1 2019 | June 2019
Key Trends & Insights

Figure 13.

Top 5 Worst-Performing Android Models – Mobile Retailers

Diagnostic Percentage of Model in Total #

Model
Issues Rate6 of Android Devices Tested

Samsung Galaxy M20 9.3% 15.4%

Xiaomi Redmi 6 Pro 2.6% 4.0%

Xiaomi Redmi 6A 2.3% 2.7%

Realme RMX1831 1.6% 2.1%

Xiaomi Redmi Y2 1.5% 2.1%

As you can see, Android manufacturer Xiaomi has three models on the list. This is
interesting, as Xiaomi was one of the top-performing manufacturers overall in Q1 for
our mobile processing customers.

Now let’s take a look at how iOS devices coming into retail stores across the globe are
performing. Only devices composing at least 1 percent of overall iOS devices tested are
included in this analysis.

Figure 14.

Top 5 Worst-Performing iOS Models – Mobile Retailers

Diagnostic Percentage of Model in Total #

Model
Issues Rate6 of iOS Devices Tested

iPad mini 4 8.2% 2.2%

iPad Air 2 7.8% 2.1%

iPad (6th generation) 7.3% 2.0%

iPhone 6 6.7% 11.2%

iPhone 6S 6.7% 14.1%

It is interesting to note that the iPhone6 model showed up on the worst-performing

list for both mobile processors and mobile retailers, as it has in many quarters before.
However, it was tablets that took the top spot of having the most devices tested with
at least one diagnostic issue.

6 Percentage is against the number of devices tested of the same model.

10 State of Mobile Device Repair & Security | Trend Report: Q1 2019 | June 2019
Key Trends & Insights

Most Popular Diagnostic Tests & Average Test Duration Times

(Processors)

This quarter, Blancco mobile processor customers performed, on average, 26

diagnostic tests to determine the quality and performance of the devices they received
in their warehouses. The testing process took less than three minutes to perform from
start to finish.

Figure 15.
Top 10 Diagnostic Tests Performed

96+9595+ 94+ 93+ 93+ 90+ 90+ 89+ 83+

96% 95% 95% 94% 93% 93% 90% 90% 89%
83%

Wi-Fi LCD Volume Touch Speaker LCD Screen Home Vibration Screen
Color Keys Backlight Lock Key Key

These are the top ten diagnostic tests performed, with Wi-Fi being tested most often,
closely followed by an LCD Color test and volume keys test. Note that screen (number
10 on the list) is a manual test. Compare this to last year’s data, below. Note that some
tests, like Wi-Fi, are automatic. This may affect their position in the frequency of tests
performed.7

However, the Blancco Mobile Diagnostics & Erasure product is completely configurable,
meaning tests can be turned “on” or “off” as fits each processor’s unique requirements.

Figure 16.
Top 10 Most Common Diagnostic Tests Performed

94+9492+ 90+ 81+ 81+ 78+ 75+ 74+ 70+

94% 94% 93% 90%
81% 80% 78% 75% 74% 70%

LCD LCD Speaker Battery Touch Screen Vibration Volume Home Accelerometer
Backlight Color Charging Lock Key Keys Key

7 Automatic tests include the following:

• S peaker / Mic • Wi-Fi • Bluetooth • Performance
• Battery Charging • Battery Wear • Carrier Signal • USB
• Battery Temperature • Auto Focus • Dual SIM • SD Card

11 State of Mobile Device Repair & Security | Trend Report: Q1 2019 | June 2019
Key Trends & Insights

Average Reset / Erasure Times & Top Erasure & Wiping Standards
Used

Along with our analyses of top performing devices and manufacturers, we also looked
at how long it was taking processors to erase iOS and Android devices, from plugging
in the device all the way to certification. The majority of Blancco customers continue to
use Aperiodic Random Overwrite as their erasure method of choice for Android devices
to achieve data sanitization. About 64 percent of devices processed by Blancco mobile
processor customers were sanitized using this erasure standard. The second-most
popular method used was HMG Infosec Standard 5, Lower Standard at 18 percent of
devices. Additionally, about 11 percent of Blancco customers are using factory reset on
Android devices, which takes about 1.5 minutes. Overall, Android devices were wiped in
about 16.5 minutes from start to finish.

Due to their built-in encryption, iOS devices are more easily and quickly erased through
factory reset. The average time to erase these devices came in at about 12 minutes
from start to finish. We expect this time to continue to decrease with the release of our
new Blancco Mobile Diagnostics & Erasure (BMDE) on Mac® solution in June 2019. In
this release, we’re providing a faster, more efficient way for processors to diagnose and
erase iOS mobile devices with fewer manual steps required. Find out more about the
new solution, here.

5G’s Impact on the Second-hand Mobile Market

During mobile’s largest industry event, Mobile World Congress in Barcelona, Blancco
was onsite in February 2019 to talk about new trends in the mobile space. One of the
highlighted trends at the event was 5G. 5G has been on the mobile market’s radar for
some time now, but it’s finally being implanted en masse this year across a plethora of
new devices. IDC predicts in its Q4 2018 Worldwide Quarterly Mobile Phone Tracker
that “by the end of 2019, vendors will have shipped 13.1 million 5G devices accounting
for just 1.0 [percent] of the total mobile phone market. The following year, 2020, will
bring 790 [percent] growth as shipments will climb to just under 117 million units.”
Additionally, the organization expects that, by 2022, 5G devices will make up 20.2
percent of the total mobile phone market.

Alan Bentley, Blancco’s President of Global Sales, stated the following in his speaking
slot at the event when asked how 5G affects mobile security: “I think what it does is,
it speeds up and makes more devices connected. Will there be some type of brand-
new [attack] that no one’s ever seen before because of 5G? I don’t think so,” he said.
“Ultimately, if you’re thinking about what the process is for someone who is trying to
gain access into your environment—they’re elevating admin privileges, they’re trying
to work their way through to a place where they can find things of value to them, and if
we’re connecting multiple devices at high speed from the home straight into work or
even autonomous cars (now, you get into a rental car and the first thing you’re doing
is syncing up your phone to their entertainment system and you know, leaving [data]
behind)—the challenge becomes [that] it’s a wider net to be able to control.”

So, it might not have a huge impact on security, but how will 5G affect the second-hand
mobile market? Research tells us that consumers are holding on to their devices
longer, and early adopters of 5G could sell back today’s flagship devices, opting for

12 State of Mobile Device Repair & Security | Trend Report: Q1 2019 | June 2019
Key Trends & Insights

5G-enabled devices instead. This remains to be seen, but if this happens, we can
expect the average sales price of used devices to go up more quickly than otherwise
expected as consumers return these flagship devices more quickly. That would be
good news for both processors and retailers looking to achieve higher profits.

New Features Could Lead to Higher Values, Older Phones Flooding

the Market

Another one of the trends discussed at MWC this year was foldable smartphones.
Many of these new phones are now hitting the market—including the Huawei Mate X.
This device is the first of what we expect will be many other foldable mobile devices in
the future. Its price? A very high €2,299, (about 2,600 USD or 2,000 GBP). This foldable
phone’s launch has been delayed, but it’s expected to now hit the market sometime in
fall 2019.

Such expensive phones will have an impact on not only the primary mobile retail
market, but also on the secondary mobile market. Resellers, refurbishers and other
such organizations will need to consider the potential costs that will be associated
with diagnosing additional components on such devices—and considerations around
training and costs for repairing them. This could also increase the average overall
resale price of mobile devices if we see more such phones like this one (and the pricey
iPhone X models) heavily purchased by consumers. It could also lead to non-foldable
devices being pushed in large quantities into the second-hand market, if such devices
really explode in popularity.

Commenting on this subject, Alan Bentley states, “New foldable phones and other
high-value devices will only continue to drive higher adoption on new devices. Given
that the current new models are expensive, we will certainly see [a] greater increase in
consumers wishing to trade in these devices to get some recovery of the expense.”

Blancco will be watching this space carefully and will look to add diagnostic support
for these devices as they become available, as well as for other new features such as
multiple-lens cameras.

Conclusion
From new foldable and 5G devices to rapid changes in the primary and second-hand mobile
markets, Q1 2019 was a busy time for mobile processors and retailers around the globe.

As the global smartphone market continues to evolve and new models and features are
added, retailers must keep pace by conducting quick, accurate assessments of mobile
device issues, solving diagnostic issues to increase customer satisfaction and reduce
returns. Mobile processors, for their part, must embrace lean processing methods to
automate erasure and diagnostic processes to ensure efficient, accurate processing
and increase throughput. The way to ensure all of these best practices are in place is
to use reliable mobile diagnostics and erasure software from a trusted global provider.
To learn more about how Blancco’s Mobile Diagnostic & Erasure solution for mobile
processors, or our Blancco Mobile Diagnostics - Retail Solution for mobile retailers, can
address these pain points, contact us today to request your free trial.

13 State of Mobile Device Repair & Security | Trend Report: Q1 2019 | June 2019
About Blancco

Blancco is the industry standard in data erasure and mobile device diagnostics software.
Blancco data erasure solutions provide thousands of organizations with the tools they
need to add an additional layer of security to their endpoint security policies through
secure erasure of IT assets. All erasures are verified and certified through a tamper-proof
audit trail.

Blancco data erasure solutions have been tested, certified, approved and recommended
by 15+ governing bodies and leading organizations around the world. No other data
erasure software can boast this level of compliance with the rigorous requirements set by
government agencies, legal authorities and independent testing laboratories.

Blancco Mobile Diagnostics solutions enable mobile network operators, retailers and call
centers to easily, quickly and accurately identify and resolve performance issues on their
customers’ mobile devices. As a result, mobile retailers can spend less time dealing with
technical issues and, in turn, reduce the quantity of NTF returns, save on operational costs
and increase customer satisfaction.

Additionally, Blancco Mobile Diagnostics solutions empower mobile processors, 3PLs,

recyclers and repair and refurbishment operations to easily, quickly and accurately
process used mobile devices to identify any issues and determine overall value. By
incorporating Blancco Mobile Diagnostics, mobile processors automate processes,
deliver intelligent routing based on device attributes and increase overall efficiency, while
driving incremental revenue and profitability.

For more information, visit our website at www.blancco.com.

Contact Us

For Marketing, please contact:

Email: marketing@blancco.com

For Corporate Communications & PR, please contact:

Email: press@blancco.com

14 State of Mobile Device Repair & Security | Trend Report: Q1 2019 | June 2019