Coming off one of their worst quarters ever in terms of net customer additions, wireless operators would be well advised to create subscriber-friendly upgrade opportunities and incentives to move users trapped on Legacy Phone Island to more advanced, powerful and feature-rich smartphones which can boost data services revenues.
Time is money, and waiting a year or years to upgrade phones is counterproductive for consumers and all those in the video ecosystem looking to cash in on expanded content delivery, sales, marketing and advertising opportunities.
With Apple preparing to possibly launch the iPhone 6 next month, sales of smartphones should continue to advance significantly. It also remains to be seen whether a large number of those buying the latest model do so using an upgrade that leaves others behind with dumb phones. Also TBD is whether any other major wireless operators follow T-Mobile’s lead and at least revamp their upgrade policies.
The Problem
Smartphone device upgrade restrictions deny many adult consumers the advanced features – including video recording and sharing – and processing capability that they would embrace if they didn’t have to use their only phone change on a youth seeking the same features or on one who hast lost/destroyed their current device.
You need only ask an adult with teen children to see their “phone” to realize the number and primitive capabilities (or lack thereof) in cell phones that belong in a Smithsonian Institute telecommunications hall, not in consumers’ pockets. The kid gets the first/only eligible upgrade in the family while others wait with devices with tiny screens and even clamshell form factors.
Growing the installed base on smart or even smarter phones would help many stakeholders in the equipment and services ecosystem and help drive broader use of content-based services.
Who Gets Hurt
Consumers are far from the only party restricted by current device upgrade policies. Consider the following groups:
Content owners – Distributing video programming to a challenged device is a nonstarter whether the consumer is young or older.
Cablecos, telcos and satellite operators – Near desperate to stem the tide of pay TV subscriber losses (cord cutting), many are providing video to multiple devices as part of a TV Everywhere strategy to add value for consumers. If the mobile device can’t cut it, the value is diminished and the strategy weakened. One in 10 smartphone owners watch TV shows on the devices, according to a survey this week from Magid Advisors, which added that the 10 percent figure is growing.
Live streamers – All those streaming content live to consumers for consumption on multiple devices find their audience smaller than it could potentially be without the eyeballs of dumb phone users.
Advertisers – The longer a consumer watched content (engagement), the better for advertisers and event sponsors. If consumers can’t receive or view the content, those hoping to pitch products and services can hang out in the dugout.
Social media sites – Difficulty reaching and interacting with social media websites such as Facebook and YouTube, which are currently adding video creation and processing capabilities, makes consumers less likely to use phones for posting updates, pictures, etc. Consumers challenged in this area could rely on laptops or simply not engage until they are better equipped.
App creators – Whether it’s a disco ball app for an iPhone or a program that helps consumer products and services companies extend new capabilities to their constituents it’s a Captain Obvious statement that phones that can’t handle or aren’t designed for downloading apps are a missed opportunity.
Who Wins?
Nonetheless, sales of smartphones continue to climb. Gartner Group said this week that worldwide smartphone sales were 220 million for Q2, a 46.5 percent increase over the same period in 2012. Perhaps those with not-so-smart units are a minority.
Consumers seeking far bigger screens, stores full of apps, video viewing and games have likely escaped Legacy Phone Island by purchasing tablets. Heading into 2012’s yearend holiday stretch, the Consumer Electronics Association’s (CEA) survey of consumers revealed tablets as the most desired CE device. The feature-rich, multi-functional devices finished not far behind world peace when respondents were asked what they wanted for the holidays overall.
T-Mobilize
T-Mobile is loudly trumpeting a simple device upgrade capability that doesn’t require a two-year commitment with an upgrade to a modern or advanced smartphone. It instead allows users to upgrade up to twice a year after six months. Hopefully competitors will take notice and follow as current policies are limiting what could potentially be a far larger installed based on smartphones – and a thriving secondary market.
Customer Retention, Innovation/Market Detention?
It’s a secret to very few that term agreements – as in two years with a sizable early termination charge – were and are designed by wireless operators to keep their customers from jumping ship to a rival (back when there were far more major operators than exist today).
By entering into a term agreement, or using an upgrade at the end of the term, you can get a much more modern and advanced device for a fraction of its retail cost with some even coming free with the commitment. But upgrading before you’re eligible saddles consumers with several significant charges – and frustration (which doesn’t bode well even for top operators.)
The Bottom Line
Were upgrades more attainable, more consumers would be packing smartphones of all brands which would very likely mean increased calling, easier texting and web browsing, (thank you bigger screens) for starters. Photo and video sharing would rise as consumers could actually view content they received and shoot and forward it around.
A climb in web use would be another benefit as consumers with the puniest of screens and antiquated/primitive web browser are often less likely to even text. Simply stated – you really can’t use what you can’t see.
Edited by
Stefania Viscusi
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