Saturday, October 17, 2015

Are Smartphone Customers Holding onto their Phones Longer?

To give credit where credit is do, Glenn Lurie comes across very well in this interview on re/code with Ina Fried:


However, this is AT&T Critic, so I have to pull apart one thing he said.  Which is that he thinks smartphone customers are "holding onto their phones longer" instead of upgrading every two years.

I don't think this is true and he doesn't cite any specific statistics.  I think it's AT&T wishful thinking.  Every time a customer upgrades, there is a danger they might switch carriers.  AT&T used to offer subsidized phones for exactly that reason, to give customers a reason to stick with them.  But the amazing success of the iPhone, and it's high expense to AT&T, encouraged them to try to transfer the costs of new phones back to customers.  In particular, they wanted customers to realize how darned expensive those iPhones are.  I think this will turn out to be a huge mistake in the long run.

Even if it's true that some customers (even a majority) are holding onto phones longer, they aren't the best customers.  AT&T should be focused on high end customers, the kinds that have multiple lines and are happy to pay extra for great service.  Those kinds of customers are more likely to be interested in upgrading more often.  Those are the people that are going to flock to Apple's new leasing program.  And once AT&T loses it's hold on them, they are more likely to switch more often.  And if AT&T isn't all about service (including subsidizing high end phones) then why should people stick with it's higher than average monthly bills?

AT&T has got to stop assuming the market will cater to them, instead of the other way around.  They did this with their war on data hogs, only to help build up T-Mobile and Sprint which highlighted unlimited plans, and now they are trying to "educate" customers that high end smart phones are expensive.  Customers will get the message, AT&T doesn't want to subsidize high end phones.  Okay, Apple lovers will rush to Apple's leasing program.  The question is, will they stay with AT&T once they do?

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