According to a new study by Consumer Intelligence Research Partners (CIRP), iPhone owners are holding on to their iPhones for an average of three months longer than in previous years. In its view, CIRP argues that this trend is having a material impact on Apple, as consumers are delaying their upgrades -- largely because iPhone upgrades are becoming increasingly incremental, at least in the minds of customers.
"We can translate these retiring iPhone age distributions into an estimate of the change in age of previous iPhones,"
said Mike Levin, CIRP partner and co-founder. "Over the past 11 quarters, in some quarters the average age of a previous iPhone increased by as much as four weeks. It did decline in a few quarters, from mid-2014 to mid-2015, and again in the most recent March 2016 quarter. Overall, over the past almost three years, the average age of a new iPhone buyer's previous iPhone has increased by approximately three months."
According to CIRP, the principal reason that users are hanging to their iPhones is that the "rate of change in iPhone features has slowed." With the iPhone maturing as a product, each upgrade cycle is less dramatic, and more incremental. One hand, it shows that customers are happy with their iPhones -- but the downside is that there is less temptation to upgrade. As Levin concludes, "the absence of compelling new features, which will encourage early upgrade from iPhone 6 models ... will influence and probably limit US iPhone sales in the coming quarters, relative to past quarters."
Another reason that CIRP cites for the slowing rate of iPhone upgraders is that mobile carrier phone purchase subsidies previously encouraged customers to upgrade their iPhone every two years. According to Levin, current "phone financing plans effectively reward customers who have paid for their phone in full." As a result, this practice is outweighing carrier incentives for users to upgrade their iPhones early, or as much as they have in the past. Coupled with the "increased availability of trade-in programs and used phone purchase websites," Apple is facing pressure on a number of fronts.
Current projections for the global smartphone market show that it will drop sharply into
single-digit growth for the remainder of 2016, while Apple also cited the strong US dollar as another factor in softening iPhone sales. With customers holding on to their iPhones longer adding to these woes, a number of analysts, including Goldman Sachs, are
bearish on iPhone sales for the remainder of 2016, the new "iPhone 7" launch notwithstanding.
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