Americans are holding onto their phones longer than ever. According to the data from the 3rd quarter of HYLA Mobile Inc., the prices of mobile devices, fewer promotions from phone carriers and the end of the 2-year contract have made consumers wait for approx. 2.83 years on average to upgrade their smartphones.
Why are people in the U.S. more content to their existing mobile devices? Why do they stick to Cox phone service or any other preferred carrier?
There are three major reasons that explain this trend:
#1: The Duopoly of Apple and Samsung
Chinese phone brands like Xiaomi and Huawei are leading the mobile phone markets in most countries. But not in the U.S. They are almost entirely absent. For a Chinese phone company to get their device onto a US carrier, they have to do is something similar to what TCL is doing with Blackberry handsets. The US government has a major role to play in narrowing consumer choice. They can only buy phones from US companies which are mainly Apple or Samsung. No wonder AT&T, Sprint, T-Mobile, and Verizon are selling these two brands only.
If you want world famous devices such as Huawei P30 Pro or OnePlus 7 Pro, neither AT&T nor Verizon has them. The only distributor of OnePlus in the country is T-Mobile.
#2: Stagnation by Apple and Samsung
Another thing that keeps Americans from upgrading their devices is that incremental changes from one model to another has not been great. A consumer does not have enough incentive to actually buy the latest model.
For instance, Samsung Galaxy S10 is a compelling device. It has a great camera, beautiful display with tiny bezels, wireless charging, huge battery life, headphone jack, and fast performance. The thing is, their 3-year-old Galaxy S7 also has the same features. S7 users would absolutely love to have S10 but they don’t really need one.
Things are pretty much the same with Apple. It only did major redesigning with iPhone X which was introduced in 2017. Otherwise, there are no dramatic changes in the design or features that would persuade a consumer to upgrade. Users can hardly tell the difference between an iPhone 6 and 6S on the first glance just like they can’t differentiate between an iPhone X and XS.
Apple and Samsung don’t have to worry about introducing aggressive upgrades either because they lack Huawei-like competition in the US market.
#3: The Super flagship $1,000 devices
Mobile carriers earn through Average Revenue Per User (ARPU). By bundling the phone rent with a subscription to music or video services, they are offering consumers long-term payment plans. That’s why Americans are willing to spend $1,000 to buy super flagship devices offered by Google, Samsung and Apple. So far, this strategy is working just fine. They only experience a marginal increase in their cost per month which is totally OK.
Phone carriers haven’t been offering generous promotions either. They have separated the cost of a phone from the monthly service fee though. Therefore, a customer is no longer bound by the 2-year ritual of upgrading their device and service contract. And once you have paid off your phone, you will be knocking a considerable sum off your monthly bill. On the other hand, when you buy a new phone, you lose this financial advantage.
A person who has spent a significant sum of money on buying a phone (and has paid for it in full as well) is more likely to keep it twice as long as one normally would. Plus, Apple has been supporting the older generation of iPhone by offering the latest iOS updates. Same goes with Android. Although Android isn’t as supportive as Apple in this matter, still a user is just fine with using an older version of Android OS. For such an audience, it does not make sense to spend 4 figures on buying a new smartphone.
Another problem is that phone manufacturers and carriers in the United States have made the most innovative devices unattainable. They are priced so high that an average consumer can’t even think about spending money on them. The cheapest Samsung Galaxy variant S10E still costs $749. The budget of Americans for a smartphone has not risen at the same pace as the prices.
When a customer decides to upgrade his device, it’s usually when they are planning to jump to another service provider.
Smartphones with novel feature keep on rolling. But if you want to buy something as compelling and affordable as Cox packages, you will have to travel to another country.
Rosie Harman is a senior content strategist working for COX Customer Service. She holds a Master’s in Business Administration from The University of Texas at Arlington and has spent the majority of her career working in tech giants in Texas.
When she escapes her computer, she enjoys reading, hiking, and dishing out tips for prospective freelancers on her blog.