The two-year contract for #Galaxy Note 8 ended two months ago. You can see one dead pixel at the edge of the screen, but it doesn't bother you much. The number of 5G (5G) mobile communication subscribers is increasing, but if you switch to 5G phones now, I feel like losing money. Next year, when a new note series comes out, I'll have to worry about changing.
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Is it because of the two year contract? In the past, it was natural to change smartphones every two years. If you move the number, you can buy a new smartphone at a lower price. As Samsung Note Series and Galaxy S Series come out every year, Samsung smartphone users usually buy even or odd numbered products. I also bought the Galaxy Note 2, 4, and 8 in order. (There was no Note 6, but it just went to 7, but at that time, I skipped 7 because of battery ignition problems.)
It is unclear who created this two-year cycle. However, it is clear that the strategies of manufacturers and mobile carriers are melting. You can't keep buying a new smartphone every year, so a two-year cycle isn't appropriate. Burst Two years later, the company said that the company designed a poor performance to switch to a new smartphone.
2 years replacement? Old words
The two-year replacement cycle for smartphones, which was considered commonplace, is changing. People are using smartphones longer and longer. Although based on US standards, the findings from market research firm Strategy Analytics (SA) show. SA surveyed 2513 Americans aged 18-64 in August this year and found that Americans change smartphones in an average of 33 months.
SA estimated the replacement cycle by adding respondents' use of their smartphones to their next replacement. By manufacturer, the Apple iPhone is 36 months and the Samsung Galaxy is 33 months. LG Electronics is 29.9 months and Google Nexus is 35.9 months. The replacement cycle increased from 26 months in 2016 to 31 months in 2018, and once again to an average of 33 months this year.
It's not just America. In Korea, smartphone replacement cycles are increasing. The most recent data is the 2016 Internet Usage Survey Final Report by the Korea Internet & Security Agency. According to the report, the average replacement cycle for smartphone users 12 years and older is 2 years and 7 months, or 31 months. When the Institute of Information and Telecommunications Research conducted a survey in 2014, the smartphone replacement cycle averaged one year and two months (14 months). In two years, 17 months have increased.
It's easy to see that you'll be using your smartphone longer, even if you compare the two statistics. As mentioned earlier, smartphones can be replaced over a 24-month or 30-month commitment. However, the survey found that more than half of the users were over 30 months at the end of the contract period (53.7%).
Why don't you change your smartphone?
You won't change your smartphone simply because it's annoying. The longer smartphone replacement cycle can be seen in terms of hardware and service.
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First of all, there has been no form factor innovation. Except for 5G mobile communications, most of the new products showed only a few specifications differences, such as application processor (AP), RAM, and storage capacity. Since the introduction of the first smartphone, the form factor of the bar type smartphone has been maintained for over 10 years on the entire display screen. Even if you want to change a new smartphone, you lack the elements to feel innovation.
The performance difference is not big, but the price continues to rise. This also affects the length of the replacement cycle. Reluctant or withholding new products due to high price burden. The active use of the secondary market also has a significant price impact.
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I'm trying to change it, so I can't see a very good smartphone, and I'm using it right now without any major breakdown. Although smartphone products are so diverse and individual differences are clear, there is some consensus on the lack of innovation.
In the case of Apple's iPhone, iPhone, which has a strong fandom, is divided into two categories. The first is early adopters. They buy a product every time a new one appears. So the replacement cycle is short. In addition, the second-hand market is more active than other manufacturers. The average user tends to keep using the iPhone unless it breaks down. The replacement cycle is longer than that of Samsung and LG.
Does it affect the frequency of self-sufficiency replacement?
There is also an analysis that the terminal self-sufficiency had an effect on the service side. According to a 2015 study by SA, the average replacement cycle of diesel cell phones with self-sustainment rates of less than 30% among the 21 major continental countries was 24 months. Less than 30-70% is 28.9 months. In countries with more than 70% self-sufficiency, the average replacement cycle is 41.7 months. The higher the proportion of handsets, the longer the replacement cycle.
The lower the self-sufficiency rate, the shorter the replacement cycle is because carriers are fiercely competing to attract subscribers and sell new handsets. In addition, the handset cost is added to the communication fee, reducing the burden of purchasing a handset for consumers. It's time to replace your smartphone with a new one when you're no longer making payments on your device. Korea's self-sufficiency rate is around 8%. The replacement cycle can be viewed as a short country.
Gradually, however, interest in handset self-sufficiency has increased. The market is gradually expanding as manufacturers release self-contained smartphones one after another. There is also a debate on full self-sufficiency in the market. The government may still be difficult to implement a full self-sufficiency system, but the government is trying to reduce the burden of consumer household communication costs by increasing the ratio of self-sufficiency by supplementing various systems and statistics.
As self-sufficiency spreads, consumer decision-making about smartphone holding periods and replacement cycles will be further strengthened.
Foldable, can 5G change the replacement cycle
Changes in the smartphone replacement cycle of consumers have no choice but to affect handset makers and carriers, another market players. In particular, it can cause great damage to manufacturers. This is because smartphones don't sell.
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According to Gartner's global device shipments forecast for this year, mobile phone shipments are expected to reach 1.75 billion units this year. Last year, the number was 1.81 billion. 67 million units were missed. That's 10% less than 1.9 billion units in 2015. Again, the main reason is the smartphone replacement cycle.
"If the phone doesn't offer a whole new level of usability, efficiency and experience, users won't be upgrading the phone," said Ranjit Altwal Gartner, senior analyst.
If smartphones don't sell, makers such as Samsung Electronics, LG Electronics, and Apple should see their earnings deteriorate. In addition, it will affect the semiconductor market such as AP and memory. In the case of Samsung Electronics, which manufactures memory semiconductors, smartphones, batteries, and various smartphone-related modules, damages from increasing replacement cycles can be severe. Not only smartphone manufacturers, but also semiconductors and various material parts companies, such as communication chips, can damage the chain.
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Telcos may not be able to respond to increased smartphone replacement cycles with existing services and plans. In Korea, mobile carrier subscribers are strongly affected by the replacement cycle. Simply thinking, the longer the replacement cycle, the more time you can stay at one carrier, but the slower market changes may require new revenue strategies. Changes in the distribution market structure surrounding smartphone handset prices could weaken the carrier's initiative.
The key is 2020. In a hardware form factor that has been the same for over a decade, a new paradigm called foldable has been proposed. It would have been an indispensable strategy for manufacturers, whose smartphone replacement cycles increased and sales volume declined. Many smartphone makers such as Samsung Electronics, Huawei, Motorola, etc. are challenging the foldable phone, not just to show off new technologies. It is a strategy to create new demand for smartphones by presenting a new form factor. In other words, it will reduce the replacement cycle and sell more smartphones.
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In the same vein, 5G could change the smartphone replacement cycle. The move from Long Term Evolution (LTE) to 5G requires new 5G handsets. Both manufacturers and carriers hope.
Meanwhile, according to Gartner, the world is expected to sell 1.7171 million smartphones by 2020. It was slightly higher than this year. But in 2021, it is expected to drop slightly to 1.762.6 million. It is estimated that it still does not exceed the 1.7 billion notice.