Monday, January 06, 2014

drag2share: As Subsidies Fade, People Are Keeping Their Old Phones — And That's A Problem For Apple



In the mobile industry, growth is tied to the upgrade cycle. 

The upgrade cycle is the frequency with which people ditch older phones for newer ones. In the U.S., the smartphone upgrade cycle has steadily gotten longer over the years, and reached 22 months in 2012, according to Recon Analytics. 

Why is the upgrade cycle growing longer? Many smartphones are so good now that there's often little reason to upgrade, but also — carriers are cutting back on subsidies and moving away from rigid two-year contracts. Consumers are thinking twice about getting new phones as their upfront costs creep up. That spells trouble for Apple in particular, since the company has relied so heavily on carrier subsidies to get its phones in consumer hands, and its overall business model is so heavily reliant on hardware sales. 

In a recent report, BI Intelligence, looks at the increasingly lengthy smartphone upgrade cycle in the U.S. and in other key markets. We discuss how less frequent smartphone upgrades will impact all the major players in the mobile industry, and predict how long the smartphone upgrade cycle will get

Industry players want as short a cycle as possible, here's why.

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The report is full of charts and data that can be easily downloaded and put to use

In full, the report, explains the reasons driving a longer upgrade cycle, including:  

For full access to the report on Smartphone Upgrade Trends sign up for a free trial subscription today. Subscribers also gain full access to our 2013 Smartphone Market Forecast.