Deep dive: circular design & product-as-a-service — myths vs. realities, backed by recent evidence

The electronics industry stands at a critical inflection point. With global e-waste reaching 62 million metric tons in 2022 and projected to surge to 82 million metric tons by 2030, the linear "take-make-dispose" model has become environmentally and economically untenable. Yet despite growing awareness, formal recycling rates remain stubbornly low at 22.3%, with projections suggesting this figure will decline to just 20% by 2030 unless systemic interventions occur.

This article examines the myths and realities surrounding circular design and Product-as-a-Service (PaaS) models in electronics, drawing on recent evidence to separate genuine opportunities from industry greenwashing. We focus specifically on leasing models, take-back program economics, and refurbishment viability, providing practitioners with actionable insights backed by data.

Why It Matters

The electronics sector represents one of the fastest-growing waste streams globally, yet it also contains extraordinary material value. According to the United Nations Institute for Training and Research, approximately $15 billion worth of gold is lost annually through improper e-waste disposal. This figure does not account for other critical materials including rare earth elements, copper, palladium, and silver that are essential for manufacturing new devices.

Beyond material recovery, the circular economy represents a significant economic opportunity. Research from Accenture indicates that over 70% of manufacturing executives expect circular solutions to boost revenue by 2027. Meanwhile, estimates from WRAP and the Green Alliance suggest that raising recycling rates to 60% could create 80,000 new jobs in the UK alone, a figure that scales proportionally across other developed economies.

The market dynamics are already shifting. The used smartphone market is growing at 3.2% year-over-year compared to just 1% for new devices, signaling consumer acceptance of refurbished electronics. This trend is accelerating as economic pressures, sustainability concerns, and improved quality assurance in the secondary market converge.

For engineers, sustainability professionals, and business leaders, understanding what actually works in circular electronics is no longer optional. Regulatory pressure from EU Right to Repair legislation and Extended Producer Responsibility (EPR) frameworks is intensifying, while competitive advantage increasingly accrues to organizations that can demonstrate genuine circularity.

Key Concepts

Product-as-a-Service (PaaS) Defined

Product-as-a-Service represents a fundamental shift from ownership to access. Rather than selling products outright, manufacturers retain ownership and provide functionality through subscription or leasing arrangements. This model creates powerful incentives for durability, repairability, and efficient end-of-life management because the manufacturer bears the costs of premature failure and disposal.

In electronics, PaaS manifests through corporate device leasing programs, lighting-as-a-service offerings, and equipment rental arrangements. The model works best for products with high capital costs, predictable usage patterns, and clear opportunities for refurbishment and redeployment.

Take-Back Economics

Take-back programs enable manufacturers or retailers to recover products at end-of-use. The economics depend on several factors: reverse logistics costs, refurbishment labor and parts, secondary market demand, and regulatory compliance requirements. Successful programs achieve positive unit economics through high recovery rates, efficient processing, and strong resale channels.

The challenge lies in collection infrastructure. Unlike forward logistics, which benefits from economies of scale and predictable routing, reverse logistics must aggregate dispersed products from individual users. Programs succeed when they minimize friction for consumers through convenient drop-off points, prepaid shipping, or trade-in incentives.

Refurbishment Value Chain

Refurbishment creates value by extending product life through repair, cosmetic restoration, software updates, and quality certification. The process typically involves intake and triage, diagnostic testing, component replacement, cleaning and cosmetic restoration, quality assurance, and repackaging.

Economics improve with standardization. Devices designed for disassembly, with modular components and accessible fasteners, reduce labor costs significantly. Similarly, manufacturers who maintain parts availability and provide repair documentation enable third-party refurbishers to achieve scale.

Myths vs. Realities

Myth 1: Consumers Will Not Accept Refurbished Electronics

Reality: Secondary market growth demonstrates strong consumer acceptance when quality and warranty concerns are addressed.

The used smartphone market growing at 3.2% annually versus 1% for new devices directly contradicts claims of consumer resistance. Platforms like Back Market have processed over 30 million refurbished devices, with customer satisfaction rates matching or exceeding new product purchases. The key factors driving acceptance include certified refurbishment processes, warranty coverage comparable to new products, significant price discounts (typically 30-50% below retail), and environmental consciousness among younger demographics.

Corporate buyers have led adoption, with IT asset disposition (ITAD) becoming standard practice for enterprise fleet management. Organizations recognize that refurbished equipment from tier-one manufacturers often outperforms budget new equipment while reducing procurement costs.

Myth 2: PaaS Models Are Only Viable for Industrial Equipment

Reality: Consumer and SMB-focused PaaS models are achieving scale, though business model refinement continues.

Philips Light as a Service demonstrates that PaaS can work in traditionally consumer-facing categories. By retaining ownership of lighting infrastructure, Philips optimizes for energy efficiency and longevity, delivering illumination as a service while managing maintenance, upgrades, and end-of-life recovery. The model has achieved significant penetration in commercial and municipal applications.

HP and Dell corporate leasing programs extend this logic to IT equipment, bundling hardware, support, and lifecycle management. These programs achieve higher refresh rates while ensuring proper end-of-life handling. Emerging platforms like circuly provide software infrastructure enabling smaller manufacturers to offer subscription models without building proprietary systems.

The challenge remains consumer electronics with short perceived lifecycles. Smartphone leasing programs have achieved mixed results, often competing unfavorably with carrier subsidies and financing. Success requires either regulatory change (making true costs visible) or product categories where the service layer provides genuine ongoing value.

Myth 3: Take-Back Programs Are Primarily Marketing Exercises

Reality: Well-designed programs achieve meaningful recovery rates and positive unit economics, but many programs remain superficial.

Apple's trade-in program recovers millions of devices annually, feeding material into both refurbishment and recycling streams. The program achieves high participation rates through strong trade-in values, integration with the purchase process, and data security assurances. Apple's Material Recovery Labs have developed specialized robotics (Daisy, Dave) to efficiently disassemble iPhones and recover materials.

Best Buy's collection infrastructure provides accessible drop-off points for diverse electronics, leveraging retail footprint to solve reverse logistics challenges. Dell's closed-loop recycling program recovers plastics and metals for use in new products, with publicly reported recycling volumes.

However, many corporate take-back programs remain performative. Programs with limited drop-off options, complex eligibility requirements, or minimal trade-in values achieve negligible recovery rates. The distinction lies in integration with business operations versus peripheral CSR initiatives.

Myth 4: Regulatory Requirements Are the Primary Driver

Reality: Economics increasingly favor circularity independent of regulation, though policy accelerates adoption.

EU Right to Repair legislation and expanding EPR requirements create compliance obligations, but forward-thinking organizations are pursuing circularity for competitive advantage rather than mere compliance. Material price volatility, supply chain disruptions (particularly for rare earth elements), and customer sustainability requirements are driving adoption faster than regulatory timelines in many sectors.

That said, regulation plays a crucial role in establishing level playing fields. Without EPR requirements, manufacturers who externalize end-of-life costs gain unfair price advantages over those investing in circular systems. Policy interventions are essential for addressing tragedy of the commons dynamics.

What's Working and What Isn't

What's Working

Modular design for repairability: Fairphone demonstrates that modular smartphones with user-replaceable components can achieve commercial viability. The approach extends device lifespan, reduces repair costs, and builds customer loyalty through genuine repairability.

B2B leasing with lifecycle services: Corporate device leasing programs combining hardware provision with management services, security, and end-of-life handling achieve strong adoption. The model works because IT departments value predictable costs and reduced administrative burden.

Certified refurbishment with warranties: Refurbished electronics sold with meaningful warranties (12+ months) and certification achieve price premiums and customer trust. The certification addresses quality concerns that historically limited secondary market growth.

Integrated take-back at point of purchase: Programs offering trade-in credit against new purchases achieve dramatically higher participation than standalone collection. The approach captures devices while consumers are engaged and motivated.

Manufacturer parts and documentation access: Brands providing genuine parts and repair documentation to independent repair shops expand repair capacity without requiring direct investment. This approach is becoming mandatory under Right to Repair legislation.

What Isn't Working

Consumer device subscriptions without service value: Pure hardware subscriptions for smartphones and tablets struggle against carrier financing and outright purchase. Consumers perceive insufficient value in subscription models that merely spread costs without providing ongoing service benefits.

Collection programs requiring consumer effort: Programs requiring consumers to pack, ship, or travel to inconvenient locations achieve minimal participation regardless of financial incentives. Friction dominates consumer behavior in end-of-life decisions.

Refurbishment without scale economies: Small-scale refurbishment operations struggle with unit economics, lacking purchasing power for parts, process efficiency, and secondary market access. The industry is consolidating toward larger specialized operators.

Design for recyclability without design for repair: Products optimized for end-of-life material recovery but not for mid-life repair miss the highest-value circular opportunity. Repair extends product life, capturing far more embodied value than recycling.

Voluntary programs in competitive markets: Without regulatory requirements, circular investments create cost disadvantages against competitors who externalize end-of-life costs. Industry coordination or policy intervention is necessary for broad adoption.

Real-World Examples

1. Philips Light as a Service at Schiphol Airport

Philips implemented its Light as a Service model at Amsterdam's Schiphol Airport, retaining ownership of lighting infrastructure while providing illumination as a service. The arrangement includes installation, maintenance, upgrades, and end-of-life recovery. Results include 50% energy reduction through LED technology and smart controls, extended fixture lifespan due to manufacturer maintenance incentives, complete material recovery at end-of-life, and predictable operating costs for the airport. The model demonstrates that PaaS can achieve scale in infrastructure applications where the service relationship provides ongoing value and the manufacturer's incentives align with durability and efficiency.

2. Back Market Certified Refurbishment Program

Back Market, a French marketplace for refurbished electronics, has processed over 30 million devices through its certified refurbishment network. The platform enforces quality standards across independent refurbishers, provides warranty coverage, and manages customer experience. Key outcomes include an average price discount of 30-50% versus new products, customer satisfaction rates exceeding 95%, device lifespan extension of 2-4 years on average, and carbon footprint reduction of approximately 70% versus new manufacturing. The success demonstrates that certified refurbishment can achieve consumer acceptance at scale when quality concerns are systematically addressed.

3. Dell Reconnect and Closed-Loop Recycling

Dell's partnership with Goodwill (Dell Reconnect) provides over 2,000 drop-off locations across North America for consumer electronics recycling. Recovered materials enter Dell's closed-loop supply chain, with recycled plastics and metals used in new products. The program has achieved recovery of over 2.5 billion pounds of electronics since inception, incorporation of recycled materials in new product lines, convenient collection through existing Goodwill infrastructure, and employment opportunities through Goodwill's workforce development programs. The model illustrates how partnership with existing collection infrastructure can solve reverse logistics challenges that defeat standalone corporate programs.

Action Checklist

• Conduct product lifecycle analysis: Map current products through design, use, and end-of-life phases, identifying circular intervention opportunities at each stage. Quantify material flows, value retention potential, and current end-of-life pathways.

• Evaluate PaaS model viability: Assess which products or product categories could support service-based delivery. Consider customer relationships, usage patterns, maintenance requirements, and refurbishment potential. Start with B2B applications where the model is proven.

• Design for circularity: Implement design principles that enable repair, refurbishment, and recycling. Prioritize modular architecture, accessible fasteners, available spare parts, and clear disassembly documentation. Score products against repairability indices.

• Establish or optimize take-back channels: Create or improve product recovery programs with emphasis on consumer convenience. Consider point-of-sale collection, prepaid returns, and partnerships with existing collection infrastructure. Set measurable recovery rate targets.

• Build refurbishment capabilities: Develop in-house refurbishment capacity or establish relationships with certified third-party refurbishers. Ensure parts availability, create quality certification standards, and develop secondary market channels for refurbished products.

FAQ

Q: What recovery rate should take-back programs target to achieve positive economics?

A: Breakeven recovery rates depend on product category, refurbishment costs, and secondary market values, but most programs require 15-25% participation to achieve positive unit economics. Premium brands with strong residual values can succeed with lower rates, while commodity products require higher participation. Programs integrated with new purchases (trade-in credit) typically achieve 30-50% participation, while standalone collection rarely exceeds 10%. Focus first on high-value products where refurbishment economics are strongest.

Q: How does Right to Repair legislation affect manufacturer circular economy strategies?

A: EU Right to Repair and similar legislation requires manufacturers to provide spare parts, repair documentation, and diagnostic tools to independent repairers. This expands repair capacity industry-wide, potentially reducing manufacturer control over the aftermarket. However, forward-thinking manufacturers are embracing these requirements as an opportunity to build customer loyalty through genuine repairability. The legislation also creates competitive pressure against manufacturers who designed products to resist repair.

Q: What role do digital product passports play in circular electronics?

A: Digital product passports, required under EU Ecodesign for Sustainable Products Regulation, provide standardized information about product composition, repairability, and recycling requirements. For electronics, passports enable more efficient material recovery by providing accurate composition data, support refurbishment by documenting component specifications, facilitate regulatory compliance for EPR reporting, and potentially enable new service models based on product history and authenticity verification. Implementation is underway with phased requirements beginning in 2027.

Q: How can smaller manufacturers compete with major brands on circularity?

A: Smaller manufacturers can leverage several approaches: partnering with independent refurbishment networks rather than building internal capacity, using platforms like circuly for subscription model infrastructure, participating in industry collection programs rather than operating standalone take-back, and emphasizing repairability as a competitive differentiator against larger competitors. Modular design and parts availability are achievable at any scale and can provide meaningful market positioning.

Sources

• Global E-waste Monitor 2024, United Nations Institute for Training and Research
• The Circular Economy Opportunity in Electronics, Accenture Strategy
• Employment and the Circular Economy: Job Creation Through Resource Efficiency, WRAP and Green Alliance
• EU Right to Repair Directive and Ecodesign for Sustainable Products Regulation, European Commission
• Global Smartphone Market Analysis: New vs. Refurbished, Counterpoint Research
• Extended Producer Responsibility for Electronics: Policy Approaches and Implementation, OECD Environment Policy Papers
• Apple Environmental Progress Report 2024