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March 1, 2018 05:05 pm

Your Love of Your Old Smartphone Is a Problem for Apple and Samsung

The smartphone industry has a culprit to blame for slumping sales: Its old devices remain too popular. From a report: Flashy phones of yesteryear, particularly Apple's iPhones and Samsung's Galaxy S handsets, are getting refurbished, and U.S. consumers are snapping them up. Many shoppers are balking at price tags for new phones pushing $1,000, and improvements on latest launches in many cases haven't impressed [Editor's note: the link may be paywalled; alternative source]. As more people hold on to devices longer, new smartphone shipments plunged to historic lows at the end of 2017. "Smartphones now resemble the car industry very closely," said Sean Cleland, director of mobile at B-Stock Solutions, the world's largest platform for trade-in and overstock phones, based in Redwood City, Calif. "I still want to drive a Mercedes, but I'll wait a couple of years to buy the older model. Same mentality." Another trend borrowed from the car industry that has helped consumers get around sticker shock: leasing. Instead of buying new phones, Sprint and T-Mobile allow subscribers to effectively lease them, allowing them to trade up for the latest device. That option, though, hasn't yet gone mainstream. [...] Second-hand phones long found their way to Africa, India and other developing markets. But now, U.S. buyers represent 93% of the purchases made at second-hand phone online auctions run by B-Stock, compared with an about-even split between the U.S. and the rest of the world in 2013. Samsung and Apple together sell more than one out of every three phones globally and capture about 95% of the industry's profits. U.S. consumers, spurred by two-year carrier contracts and phone subsidies, were upgrading every 23 months as recently as 2014, according to BayStreet Research, which tracks device sales. Now, people are holding onto their phones for an extra eight months. By next year, the time gap is estimated to widen to 33 months, BayStreet says.

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