A Blog by Jonathan Low


Dec 20, 2014

The Booming Business of Smartphone Theft

Criminals used to rob banks because that's where the money was. But that took effort, time and considerable risk.

Technology has made their lives easier, too. We've made it so much simpler to steal smartphones - doesn't having it jut out of the back pocket of your jeans just look so cool? -  that estimates suggest as many as 10 percent of smartphone owners have had their phones stolen.

The opportunity, naturally, is all those people in the world who would love to have a smartphone but can not afford one. But no problem! Stolen smartphones can be had at a generous discount, no questions asked, and that fungibility is part of the reason why the user population is growing so fast, especially in places where annual household income makes it difficult to pay for electricity let alone a standard telecom contract. Is the free market awesomely efficient or what?

The reality, as the following article explains, is that until the smartphone market reaches saturation thanks to powerful but less expensive devices, this market will continue to thrive. Tracking is difficult and even for those phones armed with kill switches, there is a growing demand for second hand parts. Our penchant for convenience drives the way smartphones are carried and the reason why they are so infrequently secured.

But just to demonstrate that co-evolution has even impacted this end of the technology business, there is now also a booming market for smartphone theft insurance. JL

Dean Takahashi reports in Venture Beat:

About a third of robberies now involve a smartphone. 3.1 million Americans were victims of smartphone theft in 2013, up from 1.6 million a year earlier.
I lost my smartphone at the supermarket this year, and nobody turned it in. So I know firsthand about the problem of stolen smartphones.
Wired has a nice spread on the “The Secret World of Stolen Smartphones, Where Business is Booming,” which is also available in its magazine’s January issue. The story notes that 3.1 million Americans were victims of smartphone theft in 2013, up from 1.6 million a year earlier, according to Consumer Reports. And that device may very well wind up in Asia thanks to the efficiency of a black market.
Some interesting stats: In 2009, roughly 5 percent of the global population owned a smartphone; by the end of 2015, that is expected to be 35 percent, or 2.5 billion people. Lookout, a mobile security firm, believes that 1-in-10 smartphone owners have had their phones stolen. Sixty-eight percent of those victims never saw their device again. About a third of robberies now involve a smartphone.
And Americans spent about $4.8 billion a year on premium phone insurance and $580 million on replacement phones, according to William Duckworth, a professor at Creighton University’s business school.
But kill-switch technology is working. Apple’s Activation Lock led to a 38 percent drop in iPhone robberies in the first five months of 2014. In New York City, Apple-related robberies were down 19 percent. But criminals might still sell the smartphone parts, too.
“There’s no bulletproof solution to smartphone theft and there never will be,” wireless industry analyst Jeff Kagan told Wired. “It’s like the long war between the people who create computer viruses and the people who wrote security software. Or the people who make radar guns and the people who make radar detectors. It’s just continually escalating.”


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