Inflation is causing many consumers to pass on upgrading to a new cell phone this year, according to a survey conducted by an online personal finance platform.
The survey of more than 210 respondents, using data normalized by age, gender, and income so the sample would reflect U.S. demographics, found that nearly two in three Americans (63%) said they wouldn’t buy a new cell phone this year because of inflation.
“Inflation is certainly a significant factor in driving down smartphone purchases, but it’s important to recognize that consumers are getting smarter about where they allocate their resources,” noted Scott Dylan, founder of NexaTech Ventures, a venture capital firm in Manchester, England.
“With phones lasting longer and more affordable options on the market,” he told TechNewsWorld, “inflation may be accelerating a shift that was already happening — where the days of annual upgrades are becoming a thing of the past.”
Dev Nag, CEO and founder of QueryPal, an enterprise chatbot based in San Francisco, added: “It’s important to note that while inflation may delay purchases for some, smartphones have become essential tools for many people’s personal and professional lives. This necessity may lead some consumers to prioritize phone purchases even in challenging economic times.”
“Additionally,” he told TechNewsWorld, “the trend towards keeping phones longer may accelerate due to economic pressures, potentially impacting the smartphone industry’s traditional upgrade cycles and revenue models.”
Inflation-Resistant Phones
Ordinarily, inflation doesn’t affect luxury items, but the iPhone is an exception, asserted Rob Enderle, president and principal analyst at the Enderle Group, an advisory services firm, in Bend, Ore. “iPhones sell into non-wealthy segments,” he told TechNewsWorld. “This should have eroded Apple’s brand image as a luxury brand, but it has not. Inflation has a far bigger impact on middle-class and below buyers than it does on the wealthy.”
Ironically, while inflation has hit the prices of many products, flagship smartphones have been, for the most part, inflation-resistant. “Most of the price increases have been limited to premium models,” noted Max McCaskill, a staff writer with WhistleOut, a search engine for cell phone and internet services.
“The iPhone 16 has maintained the [US]$799 starting price that began with the iPhone 12 of 2020,” he told TechNewsWorld. “The $799 release price of the Samsung Galaxy S24 was the same as the S21 from 2021. Google is the only company to buck this trend by consistently raising the prices of the Pixel for the past two years.”
There are reasons other than inflation that can discourage consumers from buying a new phone. “Economic insecurity and job insecurity are more likely factors in the decision to delay purchasing a new phone than inflation,” Greg Sterling, co-founder of Near Media, a news, commentary, and analysis website, told TechNewsWorld.
“Consumers sometimes take the approach of ‘If it ain’t broke, don’t fix it,’” added WalletHub writer Chip Lupo.
