Americans spent $5 billion upgrading iPhones in 2013

Many moved to new phones that were only slightly better than the ones they already owned.

By MSN Money Partner Dec 20, 2013 1:14PM
Businessman using smartphone © Image Source, Image Source, Getty ImagesBy Quentin Fottrell, MarketWatch

This year Americans spent over $5 billion on iPhones only slightly better than the ones they already owned, new research finds.

The average iPhone upgrade costs $151 every two years, which works out to $5.4 billion in upgrades every year, according to the study by SellCell.com, a site that aggregates deals from more than 20 trade-in companies. 


“We're a nation of mobile-phone lovers -- obsessed with getting a shiny new device,” says Craig Timmins, spokesman for SellCell.com. Apple (AAPL) accounts for 41% of the U.S. smartphone market, according to market research firm ComScore, and iPhone owners pay more than the average price to upgrade ($130). 


In fact, Americans spend over $11 billion upgrading all types of smartphones annually, and nearly one in four U.S. adults (23%) upgrades his or her phone each year.


Why do phones upgrade so often, beyond just because there are incentives built into the contracts? Americans appear to have an emotional relationship with their phones, according to a recent study by the Pew Internet & American Life Project. 


Indeed, that study found that 44% of smartphone owners -- 56% of the U.S. population -- have slept with their phone next to their bed. (Among the reasons people give for keeping this digital bedfellow: To make sure they don’t miss any calls, text messages or other updates during the night.) Nearly 30% of cell owners describe their cell phone as “something they can’t imagine living without,” and 67% say they check their phone for messages, alerts or calls without it even ringing or vibrating.


Upgrading to a new phone has also become easier. A quarter of those surveyed said early upgrade programs from Verizon Edge, T-Mobile Jump and AT&T Next will make them more likely to upgrade sooner, Timmins says. Verizon Edge, which launched in July, provides a payment plan that spreads the retail price of a phone over two years; customers can also upgrade to a new phone after six months if 50% of the retail cost has already been paid. 


AT&T Next also allows customers to choose a new smartphone every 12 or 18 months on an instalment plan with no financing fee.


Trading in used phones has become a global business, thanks in a large part to the supply of Apple’s iPhone and the global demand overseas for the product. Consumers can trade in their old Verizon 16-gigabyte iPhone 4S for $110 and iPhone 5 for $280 on resale site Gazelle.com in “flawless” condition, and Nextworth will pay $99 for the Verizon 16-gigabyte iPhone 4S. In fact, iPhone trade-ins are up 74% so far this year over the same period last year, while Samsung trade-ins are up 114% so far this year compared with last year, according to Gazelle.com.


And they keep coming: Since 2007, Apple has sold seven separate iPhones -- the original, 3G, 3GS, 4, 4S, 5, 5s and the multi-colored plastic 5c. By 2017, Apple will have a 90% penetration rate and 68% of the U.S. smartphone market, according to new statistical analysis by market researcher Asymco. The logistical growth of iPhones is almost perfectly parallel to that of the overall smartphone market, the research found. “The reason for this seems to be that consumers are absorbing the product similar to how they are absorbing the technology."


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19Comments
Dec 20, 2013 2:46PM
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No wonder we have become so much dependent on smart phones. I recall those days when I used to memorize and dial about 30 phone numbers of my friends,work and relatives at the blink of a second. Now it is hard for me to recall my home number at times. God save me.
Dec 20, 2013 3:00PM
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BAAAAA.  We are a nation of sheep.
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Where Americans turn into Smigels over new features...
Dec 20, 2013 4:23PM
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I like the new 5c.  but not the way I came by it.


I was perfectly happy with my old iphone 4 - it was years old...but far better than any blackberry I ever had and I'd still have it - IF I hadn't clicked on the upgrade to ios7!  (Grrr...) 


my 4 lasted 3-4 weeks more...but in the end, it just couldn't function anymore with the upgraded software.  I actually got the 5c FREE though....I got $120 for my 4 at Best Buy...and the 5c only cost me $99.  Even after taxes I left with a gift card. lol.


(why was my 4 worth so much? PRISTINE was what it was called.  I'd never had it out of my case...and I immediately got on the Lifeproof website and ordered the "free" lifeproof for  my 5c.  It will also be perfect years from now.  With any luck, I won't have to upgrade for years to come.

Dec 20, 2013 5:02PM
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     I PHONE'S ARE A STATUS SYMBOL.  LOOK AT ME,  ME AND MY PHONE ARE JOINED AT THE PALM.  ANOTHER STARBUCK ANYONE.
Dec 20, 2013 6:32PM
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this guys out to lunch.. obviously interpreting the data for the outcome he wanted.. bet he owns one.. lol.. to funny.. well the era of it as a status symbol is over .. except for those who are constantly late to the party or miss the boat.. sad really when you see them .. its like awww we already did that but hey you can still play with us too..
now take the status part out these phones are nice but have limited abilities.. and who wants that..

Dec 20, 2013 6:54PM
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Look, lucky me I have a iphone 4 for work and a Samsung 3s for home...

The thing is there is things that I like about each of them, but neither is ideal.

I also totally dislike the last iphone update. it makes it harder to use than easier..


Dec 20, 2013 5:18PM
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Don't be bitter because you can't afford one…now GFY!
Dec 20, 2013 3:11PM
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People, you will be better off buying a Nokia 520 for just $59, than $600 on a iPhone.


Heck you don't even need a cell plan, just get a $3/month US subscription on Skype and you can call unlimited over wifi.


Anytime I see an iPhone it just looks like a child's toy.

Dec 20, 2013 2:55PM
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I find absolutely zero utility in a mobile phone.  This is in theory only since I've never owned one.
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