As the market gets more saturated with smartphones, carriers are finding a new challenge in keeping profits up. It seems that even as smartphones get smarter, the perceived technical leap between models shrinks, and the drive to upgrade slows down. Most users would agree that going from a flip phone to any smartphone model – HTC, Apple, Samsung– is like going from a buggy to a spaceship. But subsequent upgrades are less impressive, and thus less attractive, considering the sky high prices of new phones.
To combat the attrition of users eager to shell out hundreds of dollars every few years for a new device, carriers are starting to shorten the previously sacred “new every two” contract term. The hope is that users will upgrade more frequently, thus taking advantage of newer technology. The upgrades would hopefully be most attractive to tech savvy users, who are also often the heaviest data consumers, and thus the mostprofitable customers.
T-Mobile and AT&T have announced annual upgrade plans so far, it remains to be seen if others will follow the lead. Verizon appears to be working on a similar plan, but both AT&T and Verizon’s plans will likely mean higher (possibly much higher) initial phone costs, payable over time vs. up front. So the option to upgrade comes sooner but the privilege comes with a price. As with all things, there is no free lunch.