Apple could face slower upgrade cycles as study shows iPhone owners clinging to devices longer
A slower rate of technical improvements in the iPhone, coupled with new carrier financing plans phasing out two-year subsidies, have helped to change how frequently mobile customers upgrade their Apple handset, a new study has revealed.
Most iPhone owners are now keeping their Apple an average of three months longer than they did in the past, according to a new survey published this week by Consumer Intelligence Research Partners.
In the past, iPhone owners upgraded roughly every two years, thanks to typical two-year service contract subsidies. However, the pace of upgrading has been steadily slowing: In 2013, only 5 percent of all iPhones were three years old, but by the end of the March 2016 quarter, that share had increased to 12 percent.
And in June 2013, 66 percent of all iPhones were either under a year old or at most two years old. By March 2016, that had fallen to 51 percent.
"Overall, over the past almost three years, the average age of a new iPhone buyer's previous iPhone has increased by approximately three months," said Mike Levin, a CIRP partner and company co-founder.
Levin and fellow partner Josh Lowitz attribute the longer ownership times to two factors: the slower rollout of new features, as well as a change in carrier financing plans.
In the past, carriers encouraged customers to upgrade their phones every two years by offering subsidies and discounts on new phones. Now, however, the plans reward customers who hold on to their phones and have paid them off in full.
"This motivator appears to outweigh the impact of any early upgrade options that carriers offer with the new financing plans, and the increased availability of trade-in programs and used phone purchase websites," the study reads.
Since new iPhone sales are increasingly made to existing owners and these owners are keeping their phones longer and upgrading less often, Levin and Lowitz predict a slowing of iPhone sales in the future.
Apple is widely expected to launch its next-generation handset, unofficially known as the "iPhone 7," in September. Leaks thus far have suggested its appearance will be largely similar to that of the current iPhone 6s series, but with a thinner design that could ditch the 3.5-millimeter headphone jack.
The largest changes are expected to be exclusive to the larger 5.5-inch "iPhone 7 Plus" model, including a new dual-lens camera design, and potentially a magnetic Smart Connector that could be used for charging or even data transfer, just as it works on the iPad Pro lineup.
Most iPhone owners are now keeping their Apple an average of three months longer than they did in the past, according to a new survey published this week by Consumer Intelligence Research Partners.
"Over the past almost three years, the average age of a new iPhone buyer's previous iPhone has increased by approximately three months" - Mike Levin, CIRP
In the past, iPhone owners upgraded roughly every two years, thanks to typical two-year service contract subsidies. However, the pace of upgrading has been steadily slowing: In 2013, only 5 percent of all iPhones were three years old, but by the end of the March 2016 quarter, that share had increased to 12 percent.
And in June 2013, 66 percent of all iPhones were either under a year old or at most two years old. By March 2016, that had fallen to 51 percent.
"Overall, over the past almost three years, the average age of a new iPhone buyer's previous iPhone has increased by approximately three months," said Mike Levin, a CIRP partner and company co-founder.
Levin and fellow partner Josh Lowitz attribute the longer ownership times to two factors: the slower rollout of new features, as well as a change in carrier financing plans.
In the past, carriers encouraged customers to upgrade their phones every two years by offering subsidies and discounts on new phones. Now, however, the plans reward customers who hold on to their phones and have paid them off in full.
"This motivator appears to outweigh the impact of any early upgrade options that carriers offer with the new financing plans, and the increased availability of trade-in programs and used phone purchase websites," the study reads.
Since new iPhone sales are increasingly made to existing owners and these owners are keeping their phones longer and upgrading less often, Levin and Lowitz predict a slowing of iPhone sales in the future.
Apple is widely expected to launch its next-generation handset, unofficially known as the "iPhone 7," in September. Leaks thus far have suggested its appearance will be largely similar to that of the current iPhone 6s series, but with a thinner design that could ditch the 3.5-millimeter headphone jack.
The largest changes are expected to be exclusive to the larger 5.5-inch "iPhone 7 Plus" model, including a new dual-lens camera design, and potentially a magnetic Smart Connector that could be used for charging or even data transfer, just as it works on the iPad Pro lineup.
Comments
Often (especially in the future) a customer's reason for upgrading iPhone will be the combination of multiple Apple offerings. e.g.,
- iPhone + Apple Pay
- iPhone + Apple Music
- iPhone + Apple TV
- iPhone + Home Kit
- iPhone + Watch
- ... etc.
As there are changes in these other 'ecosystem' offerings, in some cases that will motivate customer to upgrade their iPhone to access the new upgraded services.
How long a phone lasts has nothing to do with how many you sell. Eventually those people are going to upgrade. And I would think having a phone that lasts longer would further cause people to buy an iPhone since they know they'll get more use out of it before wanting/needing to upgrade (unlike your Android flagships where support disappears less than 2 years after you buy it).
In our household of 5 (2 adults, 3 children) we had 1 iPhone under subsidy when the Apple upgrade program was announces (the 4 other iPhones were old enough that their subsidies had finished). We bought 5 new iPhone 6s under the iPhone upgrade program, so we all have the latest iPhones -- and we will, likely, all upgrade again to the next iPhone ... No brainer, really!
Sure it is a wider market now but the US still accounts for the most sales, 19% whereas China 12% so the subsidy is a measurable factor in my opinion.
It used to be ridiculously difficult and expensive to upgrade yearly. Now, THANKS TO AT&T NEXT and similar plans, it is now cheaper and easier.
And LOL@ your "Unlimited" data plan. I'm having a much better and cheaper experience than you on AT&T by using their newer plans. You're obviously completely unaware of the cost structure today, and don't realize you are being taken.
http://www.tech-thoughts.net/2012/05/proof-of-iphones-dependence-on-carrier.html
These are figures from 2012 which contradicts your claim of NEVER.
We live in the San Francisco East Bay, and there are 2 teen-age boys in the family.
There are literally no traditional ways for them to make money -- nobody gets a paper delivered, pays someone to wash their car or mow their lawn. They literally rely on earning an allowance for household chores (cleaning, polishing, sweeping, dusting, vacuuming, mowing/weeding/edging our lawn, etc.)
When I was a kid, I didn't get an allowance, but I did all those activities as my responsibility of living in the family home. For cash, I mowed lawns, washed cars, had a paper route -- and had several part-time jobs: furniture store maintenance; install seat covers; work on Rose Bowl Floats, etc.
The combination of affluence, and [California] state laws and regulations make it very difficult for a kid to earn enough money to buy an iPhone.
To compensate, so the kids get an education on making, saving and spending money -- we provide them with extra make-work jobs, such as painting their rooms, cleaning the garage and tool shed, etc. We recently replaced our redwood fence and saved most of the old fencing -- it has a beautiful weathered gray old-barnwood-like look. We are using it to make indoor and outdoor furniture, and one of the kids made several hundred dollars removing nails, power-washing and stacking and stickering the wood.
But opportunities like that are pretty rare.
I'm actually pretty surprised that the majority of iPhone customers have historically upgraded that quickly. In my case, as well as the several other extended family members who all share in an AT&T shared data plan, the husband or wife buys a brand new iPhone and hands off their (now) old one to their spouse. In my case, I'm using my wife's old 5S while we bought her the 6S last fall. iPhones last plenty long if you can avoid dropping it, with the only possible problem being the battery going south. This way, we're only ever paying off the loan on one phone; the one I'm using is only costing me $30 per month for cell service so it becomes pretty cost effective if you don't need the latest and greatest phone and can get in on a shared data plan.
Apple's ecosystem is huge because people keep piling in.
Do you know what your saying or just like inane crap?
The S6 and S7 look just about the same. In fact most company's high end phone look the same 2 years running these days.