Study: Lack of innovation stretches phone replacement cycle to 33 months

Brief:

U.S. consumers are holding onto their smartphones for an average of 33 months as a lack of innovation gives them reason to upgrade less frequently, a survey by Strategy Analytics found. The firm said consumers are very interested in next-generation 5G mobile service, although high smartphone prices will be a significant barrier to entry.
The average Apple smartphone has been active for 18 months, longer than the 16.5-month average for Samsung devices. The two companies remain dominant with brand loyalty of more than 70%, while other device makers like LG and Motorola see repeat purchase intentions of less than 50%.
Just 7% of U.S. consumers said they would spend over $1,000 on a new phone, while "wow features" are important to only about one-third of those surveyed. One out of four people said 5G will be important for their next mobile device, per Strategy Analytics.

Insight:

Mobile device makers have steadily added more features to their smartphones to command higher prices, especially for flagship models, but their ability to entice consumers into upgrading has declined as innovation stalls and the "wow factor" of device offerings wanes.

Smartphone makers and wireless carriers may regain momentum as 5G service rolls out nationwide with the promise of significant improvements to download times for data-intensive content like videos. Verizon this week introduced 5G service to parts of Phoenix, the 10th city in its planned nationwide expansion.

The trend toward longer ownership periods has pressured device makers around the world. Global smartphone shipments fell for the seventh straight quarter in Q2 2019, the International Data Corp. found. The researcher estimated that global shipments fell 2.3% to 333.2 million in Q2 from a year earlier, representing a smaller drop than the 6.6% yearly decline observed in Q1 2019.

Declining sales of smartphones has pushed Apple to expand its services business to generate ongoing revenue from each of its device owners. The company's recent earnings report showed a 12% drop in iPhone sales to about $26 billion during the three months ended June 29. However, paid subscribers to services like Apple Music, Apple News and iCloud storage grew to 420 million from 390 million in the prior quarter, and the company plans to roll out additional services such as a credit card, a video-streaming service and a game platform this year. Apple isn't expected to introduce a 5G iPhone until next year at the earliest.