Consumer Trends in Mobile Phone Upgrade Cycle
July 22, 2020
When Do Consumers Upgrade?
The Contributing FactorsDepreciating Values of Mobile Devices
Looking at the Apple device release in the same year, on a depreciation percentage basis, the Galaxy S10 range lost more in the first month as the iPhone XS/XR range did in 9 months. For consumers who rely on trading in their old device when they upgrade, the loss in value may be prohibitive to them trading in for a new device that are likely more expensive than their current one.
Increasing Prices Not Aligned with Perceived Increase in Technology
Smartphone innovation is continuing. New top-end phones have better screens, and cameras aided by artificial intelligence. They’re more durable and water-resistant. But these improvements may not be enough to convince the average consumer to pay for a new phone, especially if their current phone is sufficient for most tasks. With the ever-increasing price tags, consumers need to be able to see the benefits to upgrading. While companies have been increasing their revenues by launching new variant phones with increased frequency, the maturity state in a few regions might be challenging for their revenues. However, 5G handsets and foldable phones are likely to provide them with new opportunities. Consumer Technology Association (CTA) forecasts that the 5G-enabled devices are likely to reach 2.1 million units to generate USD 1.9 billion in revenue this year. The NPD Group’s new Mobile Phone Tracking service reveals that just under 10% of consumers are spending over $1,000 on their smartphones. Since these consumers will be the target audience for 5G devices, which typically hit the market around the $1,200 price point, this may bring into question how quickly consumers will choose to upgrade to 5G.
What It Means for Carriers, Retailers and ManufacturersAccording to Deloitte, several big innovations could spur a new round of smartphone upgrades—but their impact could take time. Things like foldable displays, 5G and AI chips and apps could be enough to encourage new phone purchases if they are timed correctly. With these innovations, consumers will have plenty of reasons to refresh their smartphones. The question is: Will consumers pay the price tag or keep their high-functioning device as long as possible and buy aftermarket devices when they have to?
With consumers hanging on to their phones longer and values of devices depreciating quicker over time, a fast, efficient returns process is key for carriers and retailers to getting the most out of the devices. As devices are getting more expensive, consumers are turning to aftermarket devices when they do decide to upgrade. The prices for aftermarket devices are increasing too, though, so tapping into those potential sales as quickly as possible will garner a greater return.
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About UsIngram Micro Commerce & Lifecycle Services (IMCLS) is the global leader in logistics, commerce enablement & device lifecycle services. We provide supply chain solutions to connect supply and demand and proudly serve customers across a broad spectrum of industries, from fast-growing brands to Global 2000 enterprises. Our global warehousing network, world-class technology, strategic partnerships and decades of experience provide a trusted foundation for growth.
We Know MobilityFrom omni-channel fulfillment to serialized reverse logistics supported by end-to-end tracking, our mobility solutions are designed to increase your margins and ensure inventory velocity throughout the product lifecycle.
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Julie JutteJulie Jutte is a Product Marketing Manager at IMCLS focusing on Mobility. She helps generate and nurture business with new and existing customers through targeted marketing campaigns, external communications and thought leadership that highlights our business and leadership's depth of experience and knowledge. Julie has spent years in the communications and marketing fields, working to understand customer needs, develop thoughtful product and service storytelling and become an industry expert. She is passionate about multi-channel campaign development and understanding the voice of the customer, as well as, being a self-proclaimed foodie who never stays still too long.
Julie Jutte 2020-07-22