Fewer People Upgrade Smartphones as Cool Factor Fades

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iPhone 5

The Wall Street Journal has just announced the smartphone’s days in the spotlight may be fading.

The rate at which users trade in their smartphones for newer models is now on the decline.

The shift started last year, with a 9 percent drop in upgrading, according to an analyst at UBS, and the decline should continue again this year.

The market may be saturated as 70 percent of cellphone contracts with a mobile carrier are now for smartphones.  Plus, the rate of innovation has slowed, causing less urgency to upgrade, said The Wall Street Journal.

Smartphone makers are still seeing growth, but much of that is overseas.  Growth in emerging markets is expected to reach 48 percent this year, according to Strategy Analytics.

There’s another factor in upgrade slowdown in the U.S.  The carriers make less money when someone trades up, because the carriers subsidize the phone.  To keep profit afloat, carriers have been adding fees when someone upgrades or extending the time period between upgrades.

On a side note, the market may be moving into other wireless devices.  Apple Insider reported Tuesday that 5 million smart watches will ship in 2014. Apple is expected to debut an “iWatch” later this year or in 2014.

Source: The Wall Street Journal

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