Inflation is leading many consumers to forgo upgrading to a new cell phone this year, according to a survey by an online personal finance platform.
The survey, which included over 210 participants and was adjusted for age, gender, and income to reflect U.S. demographics, revealed that nearly two-thirds of Americans (63%) are opting out of new cell phone purchases due to inflationary pressures.
Scott Dylan, founder of NexaTech Ventures, observed, “Inflation is undoubtedly a major factor in reduced smartphone purchases. However, it’s also clear that consumers are becoming more strategic in their spending decisions.”
He added, “With phones having longer lifespans and more budget-friendly options available, inflation might be speeding up a shift that was already occurring—moving away from the era of frequent upgrades.”
Dev Nag, CEO and founder of QueryPal, emphasized, “While inflation may delay some phone purchases, smartphones remain crucial for both personal and professional use. This necessity might lead certain consumers to prioritize buying a new phone despite economic challenges.”
Nag also noted, “Economic pressures could further drive the trend of keeping phones longer, potentially altering the traditional upgrade cycles and revenue models within the smartphone industry.”
Inflation-Resistant Phones
Typically, luxury items are less impacted by inflation, but the iPhone appears to be an exception, according to Rob Enderle, president and principal analyst at the Enderle Group in Bend, Ore. “iPhones cater to a broad market, including non-wealthy segments,” he told TechNewsWorld. “This should have diminished Apple’s image as a luxury brand, but it hasn’t. Inflation affects middle-class and lower-income buyers more significantly than it does the wealthy.”
Interestingly, while inflation has generally increased the cost of many goods, flagship smartphones have largely remained resistant to these price hikes. “Most price increases have been confined to high-end models,” noted Max McCaskill, a staff writer with WhistleOut, a cell phone and internet service search engine.
“The iPhone 16 continues to start at $799, the same as the iPhone 12 from 2020,” he told TechNewsWorld. “Similarly, the Samsung Galaxy S24 was released at $799, matching the launch price of the Galaxy S21 from 2021. Google, however, has been an exception, consistently raising the price of the Pixel over the past two years.”
Other factors beyond inflation might influence consumers’ decisions to delay buying a new phone. “Economic and job insecurity are likely more significant factors than inflation in the decision to postpone a phone purchase,” said Greg Sterling, co-founder of Near Media, a news and analysis website.
Chip Lupo, a writer for WalletHub, added, “Many people follow the ‘if it ain’t broke, don’t fix it’ philosophy. My current iPhone 12 works perfectly fine, so I plan to use it until it’s no longer supported before considering an upgrade,” he told TechNewsWorld.
Diminishing Feature Returns
Consumers are increasingly extending the lifespan of their phones, leading to longer replacement cycles and a rise in the popularity of refurbished and used devices. “We’ve definitely observed longer replacement cycles and significant growth in the refurbished and used phone markets,” said Ross Rubin, principal analyst at Reticle Research, a consumer technology advisory firm in New York City.
“Smartphones have become a mature technology category,” he told TechNewsWorld. “For example, Apple’s recent announcement introduced some advancements, but features like the new camera control button are unlikely to make users rush to upgrade their phones.”
Ross Rubin noted, “We’re seeing diminishing returns with each model upgrade. The improvements in processing power, camera quality, or software are increasingly incremental rather than revolutionary.”
Scott Dylan, founder of NexaTech Ventures, echoed this sentiment, adding that sustainability concerns are also influencing consumer behavior. “Many consumers, especially younger ones, are becoming more conscious of the environmental impact of frequent upgrades,” he said.
Dylan also pointed out that extended software support for older models is making it easier for users to keep their devices longer without compromising functionality. “The rise of software longevity allows users to retain their devices for a longer period, reducing the need for frequent replacements,” he explained.
Phone Link to Self-Worth
The survey revealed that over 40% of Americans believe it’s worth going into debt to acquire a new iPhone. WalletHub’s Chip Lupo expressed surprise at this finding. “I’m astonished that so many people think it’s acceptable to go into debt for an iPhone,” he said. “Debt is typically reserved for significant purchases like a home or vehicle, not a phone. Two out of five seems excessively high to me.”
Dev Nag, CEO of QueryPal, noted that this willingness to incur debt for the latest iPhone underscores the power of Apple’s brand and marketing. “Apple has successfully positioned its products as premium, highly desirable items worth stretching one’s budget for,” he explained. “This speaks to the perceived quality and status associated with Apple products.”
Nag added, “However, it also raises concerns about consumer financial literacy and the influence of marketing on purchasing decisions, which can sometimes undermine individuals’ financial well-being.”
The survey also found that 42% of Americans view owning the latest iPhone as crucial to their self-image. Further insights from the survey include:
Nine out of Ten Americans Believe iPhones Are Overpriced
The survey highlights that 90% of Americans consider iPhones to be overpriced. Additionally, 30% view someone who consistently owns the latest iPhone as wealthy, while 27% see them as wasteful. Furthermore, 65% of respondents believe Apple operates as a monopoly.
Scott Dylan, founder of NexaTech Ventures, observed, “Smartphones have become an extension of our identities. They are no longer just communication tools but symbols of success, personal style, and social status.”
He added, “The technology we carry conveys how connected, productive, and affluent we appear to others.”
Dylan continued, “The trend of frequent upgrades, especially among younger consumers, perpetuates this cycle. Companies like Apple and Samsung have excelled at positioning their devices as luxury items, similar to high-end fashion or cars, which encourages people to associate their self-image with the phones they own.”
