Just a few years ago, you could get a $600 phone for $200, as long as you signed up for a two-year carrier plan. How long did people keep their phones then? You guessed it, about two years on average.
The carriers balked at the subsidies, which were eating into their margins significantly but the iPhone was so popular that they just couldn't shake the practice until there was more competition and added network value services. When people saw the true price of their phones, the average length of using one and the same phone jumped from two to three years.
Galaxy S20 Ultra.The moral of the carrier subsidy story is that when phone prices are reaching deeper in your pockets, you also tend to spread that cost over a longer period of time. As you can see from our quick chart below, there's never been a time with more expensive phones than now. We though that the iPhone X at $999 was scandalous, and now we are sitting at just below $1600 at the top end with phones like the
Don't even get us started on the $999 OnePlus 8 Pro that was just announced, as its also a record price tag for the value-for-money brand. The phone makers CEOs are explaining the record 2020 pricing with the high price of 5G components and multi-lens camera kits, and, indeed the average bills of materials have risen exponentially in the last two years as well.
With the coronavirus crisis that is engulfing the globe, however, and all those stay-at-home orders, we might have to postpone our purchases of new phones, and keep our current ones longer, and the race to the $1500 phone may not have come at a worse moment.
Moreover, 5G is all fine and dandy, but the networks won't be built out in their earnest to replace 4G LTE until 2023 or so, so if you get the OnePlus 8 5G, for instance, it will be a good while until you take full advantage of it. This is why we wanted to ask you for how long do you plan to keep your current phone, or any new phone you buy?