The recent launch of early-upgrade programs like T-Mobile's Jump and AT&T's Next, and Verizon's Edge may very well be a frantic attempt to turn around rapidly falling growth in the cellphone market.
Now that smartphone technology has slowed down for the most part, with most upgrades consisting of tweaks rather than major overhauls and new products, cell phone users are finding less reasons to need to buy a new model. This forecasts trouble for major cellphone providers, who rely on the upgrade cycle to drive growth.
While the iPhone 5s might be bounds above an iPhone 4, the latter is still dependable and far better than a dumbphone. New smartphones are priced like luxury items, and users are less inclined to upgrade when their provider's plan requires payment for the new phone in full.
According to Business Insider, "Industry players want as short a cycle as possible. Here's why:
- Smartphone manufacturers rely on upgrades to get their newly launched handsets into consumer hands.
- Carriers rely on new phones that are compatible with their ultra-fast 4G wireless networks in order to encourage high rates of data consumption and boost data revenue.
- Tech companies like Apple, Microsoft, and Google pre-load the latest versions of their mobile operating systems on new smartphone models, and these handsets help push consumer adoption of the new software. This is particularly important for Google's Android platform, which historically has had trouble getting its users to update to new versions.
- Apple is particularly vulnerable to the longer upgrade cycle, since their business model depends on smartphone sales, rather than advertising (Google is less concerned if its users are on older phones).
- App developers, in turn, design software around the newest operating systems and devices, to take full advantage of available technologies. Without shiny new phones loaded with features, consumers tend to fall behind the curve.
- Marketers create rich-media and video ads that won't even load on slow smartphones."
Read more at Business Insider.
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