The rate of new smartphone upgrades is declining. Which is why T-Mobile and AT&T most likely have developed new upgrade options and carriers are trying to find new ways to market their smartphones.
UBS reported that last year when about 68 million people upgraded their phones in the U.S., down more than 9% from a year earlier.
Smartphone penetration was at 70% of contract subscribers last year in the U.S.. There are now fewer customers left to upgrade to smartphone data plans. Of current smartphone owners, fewer are seeing the need to buy the latest iPhone or Samsung Galaxy S 4.
Carriers make the most profits when basic phone owners upgrade to smartphone, because the monthly payments increase due to the added data. However, when a current smartphone owner upgrades, the carriers have to pay subsidies close to $400 per smartphone. To profit, carriers have been adding new fees and longer upgrade eligibility times.
The other trend to make an upgrade more compelling is to add features to smartphones such as waterproofing the Samsung Galaxy S 4 and the super camera to the Nokia Lumia 1020.
"Everybody has got a smartphone," UBS analyst John Hodulik told the Wall Street Journal.