Americans are holding on to their smartphones longer than they used to, according to new data from the media research firm Kantar. But that could be bad news for Apple, which relies heavily on iPhone sales to generate revenue.
In 2016, Americans kept their smartphones for 22.7 months on average, up from 20.5 months in 2013, according to Kantar. Outside the U.S., smartphone users in the U.K. and France held on their phones for the longest amount of time, at an average of 23.4 months and 22.2 months, respectively. Germans kept smartphones for about a year an eight months, according to Kantar, the least amount of time out of all the countries analyzed.
While this is all good for the average consumer — holding on to a smartphone for a longer period of time can reduce your monthly bill — it's bad for tech giants like Apple that rely heavily on new smartphone sales to generate revenue. About 60% of Apple's revenue came from iPhone sales in 2016. If smartphone users continue to keep their phones for longer periods of time, that means less iPhone sales per year, ultimately resulting in less overall revenue for Apple.
Part of the trend may be because carriers aren’t doing two-year upgrades anymore. Starting a few years ago, major wireless companies — namely T-Mobile, Verizon, AT&T and Sprint — axed two-year contracts. They now require phone buyers to purchase their devices outright instead by either paying in a lump sum or through monthly installments. With the change, consumers may be less likely to drop hundreds of dollars on a new phone every couple of years.