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.
“My current iPhone 12 works fine. I’ll use it until it’s no longer supported. Then I’ll look at upgrading it,” he told TechNewsWorld.
Diminishing Feature Returns
Consumers are also increasingly making their new phone an old phone. “We’ve certainly seen replacement cycles lengthen. We’ve seen a lot of growth in the refurbished and used categories, too,” explained Ross Rubin, the principal analyst with Reticle Research, a consumer technology advisory firm in New York City.
“Smartphones are a mature device category at this point,” he told TechNewsWorld. “Take Apple’s announcement this week. They continued to advance the platform, but things like the camera control button are probably not going to be something that’s going to spur a lot of people to scream, ‘I have to have this now!’ and then throw their current phones in the trash.”
“We’re seeing diminishing returns in terms of significant advancements between model upgrades,” NexaTech’s Dylan added.
“Consumers are holding onto their devices longer because the improvements — whether in processing power, camera quality, or software — are becoming incremental rather than groundbreaking,” he continued.
Dylan noted that sustainability concerns are also starting to influence purchase decisions. “Many consumers, particularly younger ones, are becoming more aware of the environmental impact of upgrading every year,” he explained.
“There’s also the rise of software longevity,” he said, “with companies offering extended software support for older models, making it easier for users to keep their devices for longer without sacrificing functionality.”
Phone Link to Self-Worth
The survey also found that more than two in five Americans think a new iPhone is worth accumulating debt for. WalletHub’s Lupo was a bit bewildered by that finding. “I’m surprised anyone would think it’s okay to go into debt to get an iPhone,” he said. “You take on debt for a home, maybe for a vehicle, but for an iPhone? I think two out of five is too high.”
“The willingness of some consumers to go into debt for the latest iPhone speaks to the strength of Apple’s brand and marketing,” added QueryPal’s Nag.
“Apple has successfully positioned its products as premium, desirable items that are worth stretching one’s budget for,” he continued. “This reflects both the perceived quality and status associated with Apple products.”
“However,” he said, “it also highlights potential issues with consumer financial literacy and the power of marketing to influence purchasing decisions, sometimes against consumers’ best financial interests.”
Another survey finding is that 42% of Americans think having the latest iPhone is important for their self-image. Further findings included:
- Nine out of 10 Americans think iPhones are overpriced.
- 30% of people categorize someone who always has the newest iPhone as rich, while 27% think of them as wasteful.
- 65% of people think Apple is a monopoly.
“Smartphones have evolved into an extension of our identities,” Dylan said. “In many ways, they’re not just tools for communication but are markers of success, personal taste, and even social currency.”
“The technology we carry signals to others how connected, productive, and affluent we are,” he continued.
“The culture of regular upgrades, particularly among the younger demographic, feeds into this cycle,” he added. “Apple and Samsung have done an exceptional job at positioning their devices as luxury products, much like designer clothing or cars, making it easy for people to link their self-image to the phones they carry.”
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