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Should you still buy your next smartphone — or subscribe to it instead?
The smartphone market trends towards leasing and subscription models as premium prices rise. Apple launched the Apple Upgrade program in partnership with Klarna for leasing devices, looking to provide easier upgrades. Samsung's Galaxy Forever in India supports this shift. Analysts note the need for secondary markets, as device replacement cycles extend due to high prices and effective aging devices.
Key points
- 1. Apple and Samsung shift to leasing/subscription models due to rising premium device prices.
- 2. Apple Upgrade allows consumers to lease devices with upgrade options, launched in the U.S.
- 3. Samsung's Galaxy Forever offers financing and guaranteed buyback in India.
- 4. Consumers now keep devices longer, averaging 42 months in the U.S. (up from 38-40 months).
- 5. The average global replacement cycle is projected to stretch to four years by 2026.
- 6. leasing programs aim to create a secondary market for used/refurbished devices.
- 7. Regular upgraders may find leasing more economical than outright purchases.
- 8. Phone makers aim to retain customers within ecosystems and create predictable payments.
Why it matters
- 1. The trend mirrors earlier tech ownership shifts towards subscription models (e.g., music, video streaming).
- 2. Rising smartphone costs and component prices are leading to extended replacement cycles.
- 3. The growing refurbished market creates opportunities for startups like BytePe, Raylo, and Grover.
- 4. Current leasing initiatives align with the broader trend of increasing customer lifetime value in IT.
The transition to leasing and subscription models in the smartphone industry reflects rising costs and longer usage cycles, aiming to make upgrades easier and keep consumers engaged within brand ecosystems. While outright purchases will persist, the growing trend signifies a fundamental shift in how consumers access technology.