Commentary: Smartphones last longer so why do some people still upgrade theirs each year?

SINGAPORE: Each year, a familiar pattern occurs. Apple launches its new iPhone. Shortly after it’s available in stores worldwide, snaking physical and online queues of people wanting to get their hands on this glitzy new product will form.

This year’s cycle has just started, with the iPhone 13 launched on Tuesday (Sep 14) and the phone available in Singapore starting Friday (Sep 24).

While framed by Apple as innovative, tech reviews say those small improvements in the iPhone 13 - a slightly better camera, faster processors, and more new colours – do not seem all that ground-breaking compared to its immediate predecessor, the already impressive 5G-capable iPhone 12.

That longer battery life of a few more hours might be warmly welcomed but that’s about it.

Indeed, with each generation of iPhone adding modest advances and more people already having a decent smartphone, we should expect fewer iPhones to be bought each year. And yet last year saw Apple sell over 194 million iPhones, an increase from 2019.

Why are some people still upgrading their phones frequently?

WHY SOME PEOPLE STILL UPGRADE THEIR PHONES REGULARLY

There’s little doubt the iPhone has evolved from a niche product for fanboys and early adopters to become a modern-day miracle and the best-selling tech product over the past decade.

It was a potent economic force propelling Apple forward. In those early years when each iPhone introduction brought new functionalities and significant enhancements, novelty drove sales.

Enthusiasts of iPhones typically couldn’t wait to place pre-orders when an Apple led by Steve Jobs wowed the world with striking new innovations like the touchscreen phone, the front-facing camera (iPhone 4) and a Siri personal assistant (iPhone 4S).

And so the number of iPhone users surged by about 50 per cent from 2008, only slowing down after 2012.

These days, the changes in each model seem less head-turning. Better cameras may have helped the iPhone catch up with slick Android phones in the late noughties, but nicer colours and new screen notches seem unremarkable to an average user.

Until the 5G capability was added to iPhone 12 last year, the name of the game seemed like continuous improvements, with higher processing speeds and a more powerful camera. Apple makers hoped these slight improvements would prod people, particularly its loyal base, to continue buying their phones.

Indeed, the urge to upgrade may be stronger for people who use their iPhone for creative work in entertainment and professional photography.

But even then, such users have been deferring upgrades until one or two more new models are available for a perceptible change in appearance, style, functions and performance.

GROWING ENVIRONMENTAL CONCERNS, EXPANDING REPAIR BUSINESS

Perhaps Apple’s biggest strength in making durable, lasting phones might be its Achilles’ heel. Almost one in four of Apple’s 1 billion iPhone users have not upgraded their phones for over three years, according to wealth management firm Wedbush.

That could open up a brand-new business opportunity since iPhone users will require some form of repair and maintenance services.

But the kicker is that such services might remain unattractive to run. Repairs at Apple shops are expensive. And device repairs themselves have been a loss-making business for Apple since 2009. The control-freak firm has also been loath to allow independent repair stores to meddle with their products.

A new Independent Service Provider Programme launched this year that appoints certified Apple technicians across 200 countries may be a shot in the arm for Apple’s repair business arm. But the terms and conditions, like those giving Apple the right to inspections for up to five years after partners leave the scheme, seem onerous and might discourage shops from signing up.

Still, Apple is pressing forth. The introduction of an AppleCare+ warranty programme that also provides battery replacement can remedy common pain points when phones age.

Apple is even making use of robots like Daisy to disassemble millions of iPhones each year so parts can be extracted and recycled. 

Such trends tie in well with growing eco-consciousness and the need to reduce discarded smartphone e-waste among consumers, in a world where lightning-fast technological advances are creating mountains of obsolete gadgets made from hazardous materials like rare earth minerals.

Making up 50 million tonnes in waste, smartphones contributed to 10 per cent of global e-waste in 2019. Meanwhile shortages in those same metals have created a global microchip shortage.

THE SMARTPHONE ARMS RACE

That being said, Apple is unlikely to shy away from annual launches. The smartphone has morphed from a phone to become an all-encompassing tool that allows us to do pretty much everything, and is the one device people will shell out good money for.

At the heart of the dilemma is a good old-fashioned arms race: The frequent release of new models with limited new features may be a competitive necessity to tech giants like Apple. Without doing so, the processing speeds of iPhones in the hands of consumers can easily be outperformed by the stuff competitors offer.

This annual launch cycle also plays into Apple’s new subscription-based strategy that entrenches its position in the electronics market. With the excitement of obtaining a new iPhone each year at a perceived lower cost, iPhone users are locked into an eco-system generating even more revenue for the tech behemoth.

Apple will likely aim to serve up even more bundled services to this segment - including Apple Music, Apple TV+, Apple Arcade, Apple News+ and iCloud storage - in an ambitious end-game to retain its pole position in the consumer tech space.

This is the sharp edge of Apple’s new pivot. Revenue from such services has increased year-on-year and is estimated to reach US$50 billion in profit by 2025.

Still, mobile phone makers like Apple should be careful that annual smartphone launches don’t raise unrealistic expectations for loyal customers more willing to wait for substantive leaps in tech instead of throwing cash at incremental upgrades whenever new models are available – and disappoint them.

There’s only so many less tech savvy family members who can benefit from our older, used iPhones.

Much of Apple’s big sell is its image – one that is visionary and savvy about the future. As younger consumers become more climate-change conscious and demand corporates walk the talk on environment, social and governance (ESG) goals, Apple would do well to show how its iPhone – the iconic centrepiece of its business – embodies that.

Dr Lau Kong Cheen and Dr Vanessa Liu are senior lecturers at the Singapore University of Social Sciences School of Business’ marketing programme.