As new smartphones are launching on a regular basis, U.S. consumers are starting to feel the crunch of accelerating technology cycles: 62 percent believe that their current smartphone is either obsolete or will be so before the end of their current contract. The data comes by way of a poll from Retrevo, a Sunnyvale, CA consumer electronics shopping and review site. Retrevo’s poll results confirm a belief I’ve held for a few years now: mobile technology cycles are outpacing the lengthy two-year carrier contracts.
For a frame of reference, Retrevo determined that least 120 new smartphones from major handset makers were launched between April 2010 and March 2011. While many share the same or similar specifications, this time period saw a wide range of smartphone technologies used. Processors ranged from as low as 600 MHz for inexpensive Android handsets all the way up to dual-core 1 GHz processors for the new Motorola Atrix 4G.
Speaking of 4G, most phones didn’t have access to a next-generation network a year ago; now there are some on all four major carriers, so if you want the faster mobile broadband speeds, it’s already time to upgrade. I’m all for progress, and I love the empowerment of mobile broadband, but I’ve been critical of carriers for updating speeds too quickly: if the network doubles in speed every year, a two-year contract for hardware doesn’t make much financial sense. At least not for consumers.
The core issue is that as smartphone uptake is on the rise, the technology inside the devices is currently improving on a yearly basis. And yet, many consumers opt for a two-year contract in order to gain the cheapest hardware price due to carrier subsidization. Some could go month-to-month as I do, but that generally requires paying full price for a handset. I did that in January of 2010, paying $529 for a Google Nexus One. The up-front price was steep, but it provided full freedom to change carriers or handsets without any contract termination fees. Ironically, I’ve enjoyed the phone so much that I haven’t replaced it, although I’ve seen a likely successor in the HTC Sensation 4G (shown).
One solution to get the smartphone cycle in sync with contracts is the option of a one-year carrier commitment. Depending on your carrier, you may pay a little more up front for hardware, but only be committed to a year of voice and data service. Retrevo’s poll found that 66 percent don’t want to pay more for a phone in order to get a one-year contract, while 19 percent would go for a 12-month term for an additional $100 hardware price. Ironically, Verizon Wireless just this month eliminated such a one-year contract option, so it’s either pay full price for a phone or commit to what I call “cellular servitude” as your phone becomes obsolete.
Unfortunately, U.S. consumers want it all: cheap smartphones and the ability to upgrade to better handsets more often. That’s not economically feasible for now, or in the foreseeable future, so make sure you choose your phone wisely and early in the technology cycle.