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The smartphone lifetime challenge

By Jos
Dec 16, 2015
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  1. This problem isn’t a new one for technology products, but it is for smartphones.

    After a long, powerful run, the smartphone market is starting to peak. In the US, the market is likely to be flat or even modestly down either this year or next. In the fast-growing China market, they’ve already experienced year-over-year smartphone shipment declines in the first quarter of this year. On a worldwide basis, growth is still expected to occur in 2016 but forecasts have now been reduced to single digit levels.

    Many of the recent news stories on the topic point to market saturation, particularly in regions like the US, Western Europe, and China, where smartphones have become ubiquitous. But the problem is actually much deeper—people are starting to hold onto their phones longer, extending the lifetimes of the devices.

    In a recent survey of over 3,000 consumers across five countries (US, UK, Germany, Brazil and China) conducted by TECHnalysis Research, consumers said they expected to replace their smartphones every 1.8 years. On the surface, that seems fine and is probably in line with what people have done in the past. In response to the same question about notebook PCs, people said they expected to replace those devices every 2.5 years.

    In reality, however, notebook PC replacements occur closer to 5 years. In other words, people clearly aren’t good at estimating how long they plan to keep a device. To be fair, I don’t think smartphone replacement times will be double the 1.8-year lifecycle they responded with, but I am certain they will be longer. That is the crux of the challenge for the smartphone market.

    As we saw first with PCs and then with tablets, once a market reaches the saturation point, future growth becomes nearly completely dependent on refresh rates and lifecycle—how quickly (or not) you choose to upgrade what you have.

    As we saw first with PCs and then with tablets, once a market reaches the saturation point, future growth becomes nearly completely dependent on refresh rates and lifecycle.

    In the case of smartphones, there are a number of key developments triggering these longer lifetimes. Here in the US, the gradual disappearance of subsidies from the carriers has been a big factor but, in many other parts of the world, there have never been subsidies and people have always had to pay full price for their smartphones. In those markets, and now in the US as well, the bigger issue has been a slowing down of major innovation as smartphones have matured and reached a level of quality and capability that satisfies most people’s needs.

    To be clear, I’m not saying there isn’t any innovation going on in smartphones—there clearly is—but once people get a 5” or larger HD display, a good quality camera, lots of storage, speedy network connections, and access to millions of applications and services, most people think their phone is “good enough.” Larger displays in particular have been a key factor in reaching this point and Apple, though they were late to the party, clearly benefited handsomely once they entered the larger phone market with the iPhone 6 and 6 Plus.

    Moving forward, it’s going to be much harder to provide the kind of clearly better innovations that are going to make people feel the need to upgrade. In fact, that’s part of the reason I believe carriers, as well as companies like Apple, are creating and strongly pushing programs that enable you to upgrade on a regular basis. Many of these companies are concerned you won’t otherwise upgrade frequently (or at least at a rate they would prefer). Interestingly, early reports on these upgrade programs suggest a reasonable number of people are signing up for them but crucially, not many people have actually turned in their existing phones for new ones. Apparently, many people see these programs almost as a type of insurance they can use if or when they choose to.

    The problem isn’t just hardware, either. As people start to do more and more with their smartphones, the amount of information on those devices is increasingly tremendous. That, in turn, makes the actual upgrade process from your existing phone to a new one much more complicated than it used to be. Instead of just having to transfer over your names and numbers, you now have photos, music, videos, applications, settings, and much more.

    Even if you use a number of cloud-based applications, you still have to deal with logging back into all of them, often with passwords you’ve long since forgotten. Toss in the fact you’ll likely be moving to a new version of an operating system that may or may not “like” the versions of the applications you use and could require a whole range of upgrades and you are far from a friction-free process. It’s not as bad as upgrading to a new PC, but having lived through a smartphone upgrade process somewhat recently, it’s getting pretty close.

    Despite these concerns, the smartphone market is impressively strong, with shipments in the range of 1.5 billion a year. But it seems clear we are entering a new era for the industry and the implications of longer smartphone lifetimes are bound to be far-reaching for device makers, component suppliers, app developers, and more. How companies adjust to this new reality of limited growth will be very interesting to watch.

    Bob O’Donnell is the founder and chief analyst of TECHnalysis Research, LLC a technology consulting and market research firm. You can follow him on Twitter . This article was originally published on Tech.pinions. Header image credit mobilesiri.com.

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  2. Skidmarksdeluxe

    Skidmarksdeluxe TS Evangelist Posts: 6,476   +2,034

    If manufacturers are worried about floundering phone sales then they had better get their butts into gear and develop better, far more relevant and cheaper smartwatches. They seem to think it's the future but so far they have failed to convince anyone about their relevance, apart from the gullible and gimmick lovers.
     
  3. Timonius

    Timonius TS Evangelist Posts: 640   +56

    It's a complex issue that is also deeply tied into telco's, at least in North America. Contracts aside, I think the average consumer is hard pressed for a 1.8-year lifecycle on $1K+ devices.

    If I don't see a decent upgrade to dollar ratio in my chosen smartphone line I'll just wait or try another brand.
     
  4. stewi0001

    stewi0001 TS Evangelist Posts: 1,181   +528

    One of the annoying things to me, as a consumer, is that as soon as I get a top of the line new phone, a new model is released a month or less later. Of course the stores (at least Verizon) isn't allowed to tell you when a new phone is coming out unless they have a "Hard Date" which makes it annoying for me to shop.

    I held on to my previous phone for about 4 years but that was mainly due to financial reasons. I might of held on to even longer if my battery didn't crap out.

    Of course, there is the landfill issue.
     
    Reehahs likes this.
  5. MilwaukeeMike

    MilwaukeeMike TS Evangelist Posts: 2,750   +1,105

    Good article and I think it's pretty much spot-on. But this...
    I think this was intentional for Apple. I know they told us the iPhone was designed with single-hand operation in mind - and we've all seen that commercial explaining why small phones are best - but Apple is really good at holding back features for the next model. They were late with 4G as well and didn't put NFC in a phone until the 6, and it's still restricted to ApplePay. They're also smart enough to have never put a replaceable battery in the phone, and the battery is the part that'll wear out with heavy use.

    Android phones have always used features to compete with the premium build and brand of Apple, but Apple has gotten away with holding back features so users can feel great about upgrading.
     
    Phr3d and treetops like this.
  6. pmshah

    pmshah TS Rookie Posts: 95

    I have a 5 year old Samsung Galaxy POP with original battery in perfect working condition. Only reason I switched to Galaxy Grand was because it kept running out of storage space for frequent application updates. I had to first uninstall and then reinstall the application for the upgrade to happen. Even today I am using it without a sim card as a remote control for my lan connected power controllers.

    In spite of the fact that I never use 90 % of Google apps on my phone these kept forcefully upgrading on my Galaxy grand to the point that phone was a real drag to use. So 3 months ago I got myself a Xiaomi Redmi 2 Prime. Believe me their customised UI is unbelievable. It also allows me to block default application updates on individual basis. A variety of applications that would have required rooting on Samsung phones simply run without root access. response wise it is FAST. Battery life is phenomenally good. I have everything I need and use on this device and barring needing a battery replacement it should last me several years.

    I have never been one looking for bragging rights. I look for utility and functionality and that holds true for everything in my life. So I do not have any kind of time table to replace any thing !
     
  7. Phr3d

    Phr3d TS Booster Posts: 237   +42

    Over-simplifying a bit, but Yeah, transferring my 64-odd GB of pics vids and music library was effortless via SD, I am pretty unlikely to switch to a device that makes that process more difficult with No Benefit to me as the customer.
    Kinda' reminds me of cord-cutting, I think a lot more people than the author believes are going to say, "it's just too much trouble, for the expense and no real improvement." Sexy cases don't impress us much, as we never see 'em, ya know?
    As stated so many times, by so many (and grrrr harumph to the '95' rating on the new nexus Without it):
    No SD and battery, No Sale. When sales finally fall to the point that senior management get no bonuses, I think we'll see a rapid re-invention of 'how important' the SD card is in Our phone line.
    Sorry, folks, 'smart' phones are toasters now, the differences are miniscule, the customer experience flat.
     

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