Data from a recent Consumer Intelligence Research Partners survey indicates iPhone owners are holding onto their devices longer before finally upgrading them. As recently as three years ago, nearly two-thirds of iPhones in use were a mere 1 to 2 years old. The number has now fallen to 51% of devices.
In the year ending with the June 2013 quarter, 66% of old iPhones were either under one year old or from 1-2 years old. By the March 2016 quarter, 51% of old iPhones were either under one year old or from 1-2 years old. The oldest retiring iPhones (those over three years old) increased from 5% of all old phones in the year ending with the June 2013 quarter to 12% in the March 2016 quarter.
The culprit behind the change is attributed to the slowing pace of smartphone development, (cool features), and carriers switching from plans that subsidize the phone to separately financing it.
Only a few years ago, mobile carrier phone purchase subsidies encouraged customers to upgrade a phone on a steady two-year cycle with no monthly discount for holding a new phone beyond two years. Today, phone financing plans effectively reward customers who have paid for their phone in full. This motivator appears to outweigh the impact of any early upgrade options that carriers offer with the new financing plans.
CIRP’s Mike Levin suggests consumers will only be compelled to upgrade their phones at a higher rate when compelling new features are available for the new devices.
“At least in the US, Apple increasingly sells new iPhones to current iPhone owners,”added Levin. “This means the current installed base is the most important future customer market. In the absence of compelling new features, which will encourage early upgrade from iPhone 6 models, these factors will influence and probably limit US iPhone sales in the coming quarters, relative to past quarters.”
The CIRP data was based on a survey of 2,767 U.S. Apple customers.