Commentary

Smartphones Obsolete In A Year

According to Retrevo's Technology Life Cycle analysis, a new study, 62% of U.S. smartphone owners perceived their phone to be obsolete now or will be obsolete before their contract runs out. And, the phone carriers don't want the old phone and don't want to subsidize a new one sooner than every two years.

When the study asked smartphone owners whether they would consider changing smartphones before their contract was up, 48% said they would if the terms were favorable while 20% said a two year contract on their device was fine with them. Others were not sure or might buy an unlocked phone.

Most carriers require the consumer to hold onto a phone for two years before they can upgrade, which has created a condition where new phones appear much faster than consumers are allowed to buy them. The survey found more than 120 new smartphones from major vendors over the course of about a year.

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Smartphones Released From April 2010 to March 2011

Brand

New Phones

Samsung

30+

HTC

20+

LG

15+

Blackberry

15+

Motorola

15+

Nokia

15+

Source: Retrevo, May 2011

Retrevo's Technology Life Cycle analysis engine looked at smartphones from March 2010 to March 2011and found that smartphones increased in power and added new features that moved many of last year's phones one phase over from new to mainstream. At the current rate, expect to see new smartphones with higher resolution displays, faster processors, and other new features displace the current phones by this time next year.

Emerging Technology Life Cycle Analysis for Smartphones

March 2010

March 2011

5 MP Camera

8 MP Camera

Single-core processor

Dual-core processor

Standard Definition Video

720/1080 Video

3.5g

4G

 

Front Camera

 

HDMI

Source: Retrevo, May 2011

Carriers have valid business reasons for sticking with a two year contract. Phone buyers, however, wonder if a shorter contract would be more in sync with the pace of new smartphone technology, beggings the question, "would consumers pay more for a one year contract?"

When smartphone owners were asked if they would be willing to pay extra for a shorter contract, most buyers would not. However some owners would pay extra and $100 seems like the most popular price point.

  • 66% would not pay more
  • 19% would, up to $100
  • 4% would, up to 200

Little definitive information was found with regard to carriers offering upgrades to a phone before the contract is up. Some findings include:

  •  Verizon recently scrapped their New Every Two program and currently does not offer any early upgrades before 20 months
  • AT&T offers a discount after 20 months but that is practically 2 years
  • Any Sprint customer paying more than $89.99 for a contract can get a fully discounted new phone after one year along with a contract extension

Retrevo reports that data for this report came from a study conducted online recently with over 500 users responding, distributed across gender, age, and location in the United States. Responses were weighted based on reported demographics to gain accurate estimations of gadget ownership and usage within and across demographics. All data is therefore reported as weighted data in which most responses have a confidence interval of +/- 4% at a 95% confidence level.

For additional information from Retrevo, please visit here.

 

 

1 comment about "Smartphones Obsolete In A Year".
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  1. Ed Borasky, May 13, 2011 at 12:33 p.m.

    I got a Verizon HTC Droid Incredible on the first day it was available, April 28, 2010. So it is just a little over one year old on a two year contract. At this point, there are phones I'd prefer, although not from Verizon, but I wouldn't call it obsolete by any stretch of the imagination.

    My biggest issue with the phone is that Google / HTC / Verizon are *very* slow about software upgrades. It took me a long time to get to Android 2.2. The second biggest issue is battery life.

    At this point, I'm not sure what I'll do next April when the contract is up. That's going to depend on whether 4G is available from Verizon in PDX, what the data plans cost, what the iPhone 5 is like, whether the AT&T / T-Mobile merger goes through, what apps are available for a Windows Phone, costs of unlocked devices, etc., etc.

    In short, it will be a business decision based on total cost of ownership and criteria of my usage. There is for all practical purposes *zero* competition in the smartphone and xG bandwidth marketplace in the USA right now. Personally I think Obama should do to the telecom and broadband companies what Carter did to the airlines - kill all the regulation that was protecting the "big three" and let some innovation and creative destruction happen.

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