What do the iPhone, EVO 4G LTE, and Droid 4 have in common? They all have a battery that the user cannot replace himself when they start having trouble charging.
For developers, the design is noteworthy because it is one of many factors that influence how often people replace their smartphones. The replacement rate affects the addressable market for applications built for each OS.
Smartphone vendors are increasingly using non-removable batteries for users because that design frees them up to choose a battery that lasts longer. If the battery runs out before the two-year contract ends, users have to decide whether it’s worth paying around $80 to replace it or whether they have to pay the full, non-subsidized price for the latest and greatest model.
Other factors that influence replacement rates include:
- Prepaid or postpaid? If your app caters to a demographic with a high percentage of prepaid usage, expect your customers to get a new phone more often.
“Postpaid smartphone users tend to upgrade to a new phone every 18 to 20 months,” he said Julien Blin, Infonetics managing analyst for consumer electronics and mobile broadband. “For prepaid users I believe every seven to eight months due to the nature of the business.”
- End of initial contract renewal incentive. Until recently, some carriers let customers upgrade to new models at deep discounts even when they had six months or more left on their contracts.
“Some operators have started canceling early upgrade programs because they are losing money on subsidy costs and contract durations,” Blin said. “In fact, for the iPhone 5, it looks like AT&T may have removed its initial upgrade program. [But] some smartphone users (e.g., die-hard Apple fans) don’t mind paying a premium to get the latest and greatest.”
Changes to the program are very important for the developer create applications for certain operators. If eliminating early upgrade programs increases churn for certain carriers, then the addressable applications market shrinks.
- Renewed market growth. Currently, most US carriers offer trade-in programs. Even so, less than 1 percent of cell phones are recycled, according to the Device Update Forums(DRF), a new organization that aims to increase that number. One DRF member, ReCellular predicts that within a few years, one-fifth of all smartphones and feature phones sold in the US will be refurbished.
Refurbished smartphones are significantly cheaper than new smartphones. So, if the selection of refurbished devices increases — including models that are less than a year old — it’s likely that more people will switch phones more often.
- The rise of smartphones that must be owned. Some people don’t mind paying a hefty premium to get the latest model beyond a new contract or new customer incentive.
“Refresh cycles are decreasing year after year because of companies like Apple or Samsung offering new flagship devices – iPhone 5, Galaxy S3 – every year,” said Blin, strategy manager at Samsung, where he briefs CEOs on products like the Galaxy family of tablets. and smartphones.
Is There OS Fidelity?
When people change their smartphones, do they still use the same OS? Not surprisingly, the answers vary. For example, the week of the iPhone 5 launch, iGR analysis firm surveyed 1,001 US consumers.
“Eighty-eight percent of current iPhone users are likely to buy another iPhone, and 10 percent are undecided,” said Matt Vartabedian, vice president of wireless and cellular communications research. “Sixty-nine percent of current Android users are likely to buy another Android device, and 26 percent are undecided.”
OS market share can change dramatically within the span of a two-year phone contract — or even less. For example, at the end of 2009, Android controlled less than 10 percent of the US mobile market,says IDC. One year later, it’s 45 percent. In the same period, BlackBerry’s share fell from around 45 percent to 25 percent.
Another factor that affects replacement rates is the availability of OS updates. Smartphone vendors typically only offer one major OS upgrade for their Android devices, so customers who want the latest and greatest OS version will have to decide whether to pay an unsubsidized rate for a new phone before their two-year contract expires.
Apple is an exception as it usually provides OS upgrades for all but the very oldest iPhone models. That means the majority of iPhone owners will be able to take advantage of app features that require the latest version of iOS. In the case of iOS 6, it also means developers have to move quickly to upgrade their apps so they don’t lose customers who hate letterboxing.
How fast? Less than a week after iOS 6 and iPhone 5 debuted, 63 percent of iOS Pocket customers are already using the new OS
Photo: Corbis Images
Krdel Team has been covering all things technology and telecommunications since 1998 for various publications and analytical firms. Based in Columbia, Mo., he still enjoys a childhood hobby that led to a career writing about technology: ham radio. He is a frequent contributor Digital Innovation Gazette.
