4 ms·

> we're getting to the point that it doesn't make sense to upgrade your phone every year or two The biggest reason for this (in the US at least) is the decline

by jobu 11y ago

> we're getting to the point that it doesn't make sense to upgrade your phone every year or two The biggest reason for this (in the US at least) is the decline of 2-year mobile phone contracts over the last year. Many people are rethinking their upgrade cycle now that cellphones are a direct expense instead of being subsidized by the carrier.

JohnTHaller 11y ago
Absolutely. Even though most carriers are doing something like T-Mobile is with their 2 year payoff period for phones with no interest, people see that their cell phone bill can be less each month if they don't upgrade. On the high end for the iPhone 6s Pro with 128GB ($229 up front plus $30/month for 2 years) or a Galaxy Note 5 ($0 up front plus $29/month for 2 years), people see that they can save quite a bit of money by keeping their phone longer.
- rconti 11y ago
  Yup- and this is key. You didn't have a choice before, at least not with the big carriers. They were going to take you for a full subsidy/installment/whatever phone plan, whether or not you reaped the rewards of it. As such, it was silly to not sign a new contract and pay a couple hundred for a new $800 phone every 2 years. Even back into the turn of the century, if you bought an unlocked phone off eBay, you were paying full whack for your rate plan, even though you didn't use a subsidy. I even had Cingular once try to tell me I was under contract, simply because I had signed up less than 2 years ago -- even though there was no contract (I paid for my own phone). Then a couple of years ago, they started offering "BYOD" pricing plans, so I paid my $300ish ETF, got my iPhone unlocked, and "saved" $15/mo. It was roughly breakeven. Now I just pay full price for my phone if and when I want a new one. It helps me recognize the full cost of what I'm buying, and it means I'm not tied to a carrier.
  - JohnTHaller 11y ago
    Exactly. Remember when your phone only worked on a specific carrier so even if you paid it off and got it unlocked you couldn't take it to the carrier of your choice (or any other carrier at all)? shudder Never again.
jeffpalmer 11y ago
You make a very interesting point here. My thinking was that the yearly upgrade programs such as AT&T's "Next" would drive even more growth as consumers upgraded their phone every 12 or 18 months. It would seem that these programs might not be so popular after all.
- joezydeco 11y ago
  But Apple must have some insight into the process, since they quietly introduced their own 12-month upgrade plan: http://www.apple.com/shop/iphone/iphone-upgrade-program http://www.apple.com/shop/iphone/iphone-upgrade-program (Oh yeah, with free AppleCare+ insurance) It sure looks like Apple is planning for a future where everyone is paying $25/mo forever to lease the latest handset that tickles their fancy, with the carrier being a swappable option.
- pcurve 11y ago
  I think the intent behind "Next" program is to mainly mitigate loss of subsidy, rather than drive growth. ATT makes no money selling these phones; they make money on smartphone data plan. If vast majority of your clients are already on smartphone data plan, then there's not much incentive to keep the subsidy.
brightball 11y ago
Makes you wonder if dumb phones will make a comeback...
- reportingsjr 11y ago
  "Dumb phones".. There are phones out there like the Moto G that are pretty darn nice phones for less than $200. Heck, the Moto G is even waterproof! The camera, screen, etc isn't the most amazing, but it works really well.
  - vardump 11y ago
    Tainted by Lenovo, though...
  - mrweasel 11y ago
    $200 is still pretty expensive, if you just need phone call and maybe text messaging. I wouldn't expect a huge number of people to go back to "dumb phones" though. Even if their carrier won't subsidise it or provide a payment plan, people will buy new smart phones, because they're use to having the features. Upgrades will just be less frequent.
    - Grazester 11y ago
      The Moto E is $89 No ones going back to dump phones
- arethuza 11y ago
  I think the equivalent of the "dumb phone" is a phone that is 2 or 3 years old and is perfectly good enough to keep using and not replace.
- Grazester 11y ago
  Growth is about to be stalling with smart phones and you talk about a dumb phones comeback. ...to me what this means is that smart phone companies are about to start shriveling up and dying while other companies that are able to would have to take a hit on their margins. Why would someone who wants and could now afford a cheap smartphone by a dumb phone??? I dont understand why you would think smart phones would make a comeback.
overcast 11y ago
Nothing was ever subsidized by the carrier, it was just amortized over those two years. The difference of off contract was exactly the price of a phone over a two year period. Which is why they started that ATT Next nonsense to get people locked into renting their phones.
- jessaustin 11y ago
  The difference of off contract was exactly the price of a phone over a two year period. I'd be surprised to find there was no carrier profit built into this.
  - overcast 11y ago
    There is always carrier profit. They aren't buying Apple phones for Apple price.
    - jessaustin 11y ago
      So perhaps "exactly" is not the adverb you intended?
      - overcast 11y ago
        In my case, it was exactly the cost difference.
    - jonknee 11y ago
      Actually they were/are and it has been tough for the carriers. http://articles.latimes.com/2012/feb/10/business/la-fi-iphone-blues-20120211 http://articles.latimes.com/2012/feb/10/business/la-fi-iphon...
- mikeash 11y ago
  Some carriers had no difference between on and off contract. With those, if you didn't upgrade your phone every two years you were leaving money on the table.

by jobu 11y ago

JohnTHaller 11y ago

Absolutely. Even though most carriers are doing something like T-Mobile is with their 2 year payoff period for phones with no interest, people see that their cell phone bill can be less each month if they don't upgrade. On the high end for the iPhone 6s Pro with 128GB ($229 up front plus $30/month for 2 years) or a Galaxy Note 5 ($0 up front plus $29/month for 2 years), people see that they can save quite a bit of money by keeping their phone longer.

rconti 11y ago
Yup- and this is key. You didn't have a choice before, at least not with the big carriers. They were going to take you for a full subsidy/installment/whatever phone plan, whether or not you reaped the rewards of it. As such, it was silly to not sign a new contract and pay a couple hundred for a new $800 phone every 2 years. Even back into the turn of the century, if you bought an unlocked phone off eBay, you were paying full whack for your rate plan, even though you didn't use a subsidy. I even had Cingular once try to tell me I was under contract, simply because I had signed up less than 2 years ago -- even though there was no contract (I paid for my own phone). Then a couple of years ago, they started offering "BYOD" pricing plans, so I paid my $300ish ETF, got my iPhone unlocked, and "saved" $15/mo. It was roughly breakeven. Now I just pay full price for my phone if and when I want a new one. It helps me recognize the full cost of what I'm buying, and it means I'm not tied to a carrier.
- JohnTHaller 11y ago
  Exactly. Remember when your phone only worked on a specific carrier so even if you paid it off and got it unlocked you couldn't take it to the carrier of your choice (or any other carrier at all)? shudder Never again.

jeffpalmer 11y ago

You make a very interesting point here. My thinking was that the yearly upgrade programs such as AT&T's "Next" would drive even more growth as consumers upgraded their phone every 12 or 18 months. It would seem that these programs might not be so popular after all.

joezydeco 11y ago
But Apple must have some insight into the process, since they quietly introduced their own 12-month upgrade plan: http://www.apple.com/shop/iphone/iphone-upgrade-program http://www.apple.com/shop/iphone/iphone-upgrade-program (Oh yeah, with free AppleCare+ insurance) It sure looks like Apple is planning for a future where everyone is paying $25/mo forever to lease the latest handset that tickles their fancy, with the carrier being a swappable option.
pcurve 11y ago
I think the intent behind "Next" program is to mainly mitigate loss of subsidy, rather than drive growth. ATT makes no money selling these phones; they make money on smartphone data plan. If vast majority of your clients are already on smartphone data plan, then there's not much incentive to keep the subsidy.

brightball 11y ago

Makes you wonder if dumb phones will make a comeback...

reportingsjr 11y ago
"Dumb phones".. There are phones out there like the Moto G that are pretty darn nice phones for less than $200. Heck, the Moto G is even waterproof! The camera, screen, etc isn't the most amazing, but it works really well.
- vardump 11y ago
  Tainted by Lenovo, though...
- mrweasel 11y ago
  $200 is still pretty expensive, if you just need phone call and maybe text messaging. I wouldn't expect a huge number of people to go back to "dumb phones" though. Even if their carrier won't subsidise it or provide a payment plan, people will buy new smart phones, because they're use to having the features. Upgrades will just be less frequent.
  - Grazester 11y ago
    The Moto E is $89 No ones going back to dump phones
arethuza 11y ago
I think the equivalent of the "dumb phone" is a phone that is 2 or 3 years old and is perfectly good enough to keep using and not replace.
Grazester 11y ago
Growth is about to be stalling with smart phones and you talk about a dumb phones comeback. ...to me what this means is that smart phone companies are about to start shriveling up and dying while other companies that are able to would have to take a hit on their margins. Why would someone who wants and could now afford a cheap smartphone by a dumb phone??? I dont understand why you would think smart phones would make a comeback.

overcast 11y ago

Nothing was ever subsidized by the carrier, it was just amortized over those two years. The difference of off contract was exactly the price of a phone over a two year period. Which is why they started that ATT Next nonsense to get people locked into renting their phones.

jessaustin 11y ago
The difference of off contract was exactly the price of a phone over a two year period. I'd be surprised to find there was no carrier profit built into this.
- overcast 11y ago
  There is always carrier profit. They aren't buying Apple phones for Apple price.
  - jessaustin 11y ago
    So perhaps "exactly" is not the adverb you intended?
    - overcast 11y ago
      In my case, it was exactly the cost difference.
  - jonknee 11y ago
    Actually they were/are and it has been tough for the carriers. http://articles.latimes.com/2012/feb/10/business/la-fi-iphone-blues-20120211 http://articles.latimes.com/2012/feb/10/business/la-fi-iphon...
mikeash 11y ago
Some carriers had no difference between on and off contract. With those, if you didn't upgrade your phone every two years you were leaving money on the table.