We’re keeping our phones longer. But companies aren’t going to make it easy to hold onto our money.
Smartphone makers face a new problem: Consumers are holding onto their phones for longer before opting to upgrade to a new model. What was a predictable biannual upgrade cycle will soon stretch to 33 months—close to three years, according to a report from BayStreet Research LLC. And instead of buying the latest models, many smartphone buyers are opting for older or refurbished devices as average prices rise and new features are less dramatically different than in years past. Companies like Samsung, Apple, and Google must now figure out how to keep making money when smartphone profits are rolling in at a slower pace.
According to the Wall Street Journal, it’s a dilemma familiar to the automotive industry. Carmakers were able to get around this issue through leasing programs but mainstream smartphone buyers haven’t yet warmed up to the idea of leasing their handsets quite yet. However, unlike automakers, smartphone makers rarely just make smartphones. These companies can still make money off of those who insist on holding onto their phones for three—or four—years at a time by releasing compelling accessories that augment the smartphone experience.