According to a new report by Cowen Equity Research, consumers are keeping their smartphones for a longer period of time before upgrading. The original trend in the smartphone industry was owning a smartphone for a maximum of two years due to carrier tie-ins, but as quality and prices of devices have increased in recent times, as well as the fact that the popularity of typical 2-year contracts has decreased, consumers are now opting to hold on to their devices for longer.
In a poll conducted by Cowen in the last quarter, 32.2 percent of consumers owned phones that were over two years old, a pretty big jump if compared to two years ago, when the number sat at just 23.7 percent. This figure is reportedly pretty similar across all carriers except for T-Mobile, where the company's continuous customer gains keep the demand for newer devices pretty high. Also helping the carrier is the fact that up to 12 percent of customers plan on switching providers within the next quarter. Nonetheless, despite the big increase in the use of older smartphones, it appears the majority of growth in this segment of owners still tends to come from consumers who were previously on equipment installment plans - which typically last 2 years - but have now fully paid off their devices. As of recently, nearly 45 percent of all smartphone buyers make use of EIP's to purchase devices, but this figure increases to nearly 50 percent when it comes to AT&T customers and decreases slightly to 44.2 percent for Verizon's user base. As prices of smartphones continue to climb, Cowen doesn't see the popularity of EIP's slowing down anytime soon, meaning the trend of owning devices for a longer period of time is likely to continue gaining popularity.
Currently, it appears many customers are holding off for longer than usual before making a new smartphone purchase, with this especially noticeable among those looking to buy a new flagship. Due to the impending launch of the iPhone X, as well as the recent Google Pixel 2 and Huawei Mate 10 launches, a lower-than-usual churn rate has been registered, but this could be set to change in the fourth quarter once consumers can get their hands on the device of their choice and the typical holiday season upgrades begin.