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On hold: More US consumers are delaying their smartphone upgrades

Are consumers waiting for the next wave of innovation?

US consumers are holding onto their smartphones longer due to a convergence of several factors. Several big innovations might spur upgrades, but their impact could take time.

According to Deloitte’s Global mobile consumer survey (GMCS) 2018, US edition, American consumers can’t take their eyes off their smartphones: They look at them an average of 52 times per day. Smartphones are their preferred device for social media, watching short videos, reading the news, mobile banking, and a host of other activities.1 In addition to being useful, smartphones have consistently gotten bigger and better, leading many consumers to line up—and shell out—for the latest devices. In 2015, 71 percent of US consumers owned a smartphone that was 18 months old or newer.

In 2018, however, this figure dropped to 56 percent.

US consumers: Age of current smartphones²

Why are consumers putting their smartphone refresh on hold? It could be the convergence of several factors:

  • The decline of device subsidies. In 2013, carriers started moving away from two-year plans with device subsidies in favor of equipment installment plans (EIP). Through EIPs, customers pay the full price of smartphones in monthly installments.3 By 2016, all major US carriers had transitioned to EIPs.4 Once they’ve paid their devices off, more consumers are keeping them instead of buying new ones right away.In addition, some carriers require customers to pay off their devices before trading them in.6 Combined, the rise of EIPs and tighter upgrade policies are slowing the smartphone upgrade cycle.7
  • Higher smartphone prices. The average selling price of top-end smartphone models increased from around $600 in 2015 to more than $1,000 in 2018,8 and midrange options are shrinking.Many consumers can’t afford to spend that much on an unsubsidized device every year and a half—even when the EIP allows for upgrades.10
  • Incremental innovation. Smartphone innovation is continuing. New top-end phones have better screens, and cameras aided by artificial intelligence. They’re more durable and water-resistant. But these improvements may not be enough to convince the average consumer to pay for a new phone, especially if their current phone is sufficient for most tasks.

Several big innovations could spur a new round of smartphone upgrades—but their impact could take time.

  • Foldable displays. Several smartphone makers will release devices with thin, foldable displays in 2019. Consumers like large smartphone displays, especially for watching videos and for gaming. When screens get too big, however, smartphones can become unwieldy. Equipped with thin, foldable displays, however, smartphones can fit in a pocket or purse when folded, and work like a tablet when unfolded.
  • 5G. Deloitte expects about 20 handset vendors to launch 5G-ready handsets in 2019 (with the first available in Q2) and about one million 5G handsets to be shipped by year’s end.11 That’s a small percentage of the 1.5 billion smartphones that will ship in 2019, but 5G handsets’ growth will accelerate as carriers roll out their services.
  • AI chips and apps. More smartphones now include artificial intelligence (AI) accelerators to process machine learning functions on the device. These chips can accelerate functions such as natural language processing and computer vision. We expect the number of mobile apps that incorporate AI to grow.

With these innovations, consumers will have plenty of reasons to refresh their smartphones. The question is: How many consumers will buy new phones before these innovations hit the mainstream, and how many will wait?

This charticle authored by Shashank Srivastava on February 7, 2019.

2018 global mobile consumer survey: US edition

A new era in mobile continues

Once again, smartphones are at the center of the connected universe. Our survey revealed that consumer habits—from smartphone and smartwatch adoption and increased use of digital voice assistants to demand for data and anticipation for 5G—continue to dictate telecommunications trends.

mobile phones


Deloitte, Global mobile consumer survey 2018, US edition.
Deloitte analysis based on historical data from the Global mobile consumer survey. The base includes all smartphone owners aged 18–75. 2015: 1,457; 2016: 1,531; 2017: 1,634; 2018: 1,705.
Jacob Kastrenakes, “Two-year Phone Contracts Are Now Dead at All Major US Carriers," The Verge, January 11, 2016.
Mike Dano, “As Cellphone Bills Rise, Americans Aren’t Buying New Phones," Fierce Wireless, July 13, 2018.
Seamus Conwell, “Smartphone Sales Are Slowing and Here Are Two Key Reasons Why," CNBC, February 24, 2018.
Mike Dano, “The More Things Change in Smartphones, the More They Stay the Same," Fierce Wireless, August 17, 2018.
Jake Swearingen, “We’re No Longer in Smartphone Plateau. We’re in the Smartphone Decline," Intelligencer, December 4, 2018.
10 Robert Triggs, “Why We Are Keeping Phones for Longer," Android Authority, February 2, 2018.
11 Duncan Stewart and Paul Lee, “5G: The new network arrives," Deloitte, December 2018.

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