Why Smartphone Sales are Declining

By Jon Mikow - Vice President, Wireless Jul 24, 2019 10:00:00 AM



Smartphone sales are in a funk. Here are a handful of reasons why consumers aren’t buying.

From the comfort of familiarity to accessible functionality, American consumers just aren’t as interested as they used to be in purchasing the latest and greatest smartphones. Let’s take a look at all the reasons smartphone sales are taking a dip.

Nothing New

Why are smartphones not flying off the shelves anymore? Well, for starters, most Americans already have one. As of 2018, U.S. smartphone penetration had reached 77% – that’s more than 250 million Americans who aren’t reaching for a smartphone because they’re already holding one.

Additionally, these same consumers are extending replacement cycles and keeping their smartphones longer. For most, the reasoning is two-fold: lack of innovation and, of course, cost.

When mobile phones were first released, they changed how we communicate. Then, with the release of the first smartphones, how we send and receive data was forever affected. But consumers have noticed a significant downturn in smartphone innovation—from look and feel to overall functionality—and many believe this won’t change again until about 2020 when 5G hits.

Carrier Conundrum

Sure, manufacturers have influenced the decline in sales due to the aforementioned reasons, but additional challenges at the carrier level aren’t exactly helping either. Whereas most carriers and consumers used to operate on a two-year subsidized cycle where a bi-annual upgrade was near ritual, now carriers have separated the cost of the phone from the service fees.

Current wireless contracts allow consumers to pay off devices and own them outright, leaving them with only the responsibility of their monthly service plan. Add to that the fact that promotions ain’t what they used to be, as rising smartphone costs that affect consumers affect carriers, too.

Where’s the Draw?

With nothing new to offer except higher price tags and plans structured to benefit long-term ownership, where’s the draw in buying a new smartphone? It’s a question consumers around the globe, not just in the U.S., are asking. In fact, more than half of smartphone consumers worldwide say they’ll only opt for a device upgrade when their current model conks out.

Until the latest smartphones are worth the upgrade or carriers decide to change the promotion-purchase-plan model once again, consumers are likely to continue to opt for old reliable—leaving sales sagging.

Categories: Warranty Solutions

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