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In context: Remember when we used to buy the next generation of [insert favorite brand here] smartphone every couple of years? That's not happening anymore. Price and quality have increased to the point that the next generation is just not as exciting as it was. Once 5G coverage improves, we might see a resurgence, but for how long?
Last year, we reported that projections showed mobile upgrade cycles stretching to 33 months this year — up from 31 months in 2018. However, a new study from NPD indicates that users are holding on to their smartphones even longer.
According to the Mobile Connectivity Report released on Friday, less than 20 percent of device owners are ready for an upgrade. Another 25 percent said they had held on to their previous device for more than three years before getting a new one, which is up 18 percent from two years ago (2H 2018 vs. 2H 2016).
Furthermore, 29 percent report that they have had their current phones for two years or more. Less than one-fifth of those surveyed said they would be upgrading in 2019.
The lack of user enthusiasm has been growing. It comes in part to the high price points we see these days for flagship devices. The other part of the equation is a lack of real innovation and poor design choices. People just are not willing to drop $1,000 on a phone every two years, especially when the features and aesthetics are not that exciting.
"The results of the NPD Group Connected Intelligence Mobile Connectivity Report are based on consumer panel research that reached 3,650 U.S. cellphone users, aged 18+ from diverse regions and demographical backgrounds. "
“Rising price tags, extended longevity of new generation devices, and lack of innovative features beyond imaging enhancements are a few factors reducing consumer motivation to upgrade,” said NPD Connected Intelligence Executive Director Brad Akyuz.
So what do they want? NPD notes that of those who indicated that they were interested in upgrading in 1H 2019, 34 percent were looking at the current offerings from Apple and Samsung (not next-gen). That number increases to 44 percent among millennials and 52 percent for those with annual household incomes above $75,000.
The coming of 5G service seems to be the only thing on the horizon that can reinvigorate next-gen sales.
“The emergence of 5G could help to accelerate upgrade cycles, as consumers will look to leverage faster speeds for mobile entertainment, but despite strong consumer awareness, this is expected to be a longer-term result,” said Akyuz.
Indeed, a full 64 percent of respondents said they were aware of 5G service and its advantages in 2H 2018. This number is up from 44 percent in 1H 2018, and would probably be even higher now. A third of smartphone owners are “interested” in upgrading to 5G-enabled devices.
However, with its currently extremely limited coverage, being interested in and actually buying 5G devices are two entirely different things.