The rise of the smartphone has meant that people tend to be keen to upgrade to the latest iPhone or Android device when their 24 month contract is up, but as the improvements to mobile devices becomes more iterative and less transformative and people look to save money in their monthly bills, that trend may not continue.
The difference in technology between the iPhone 3G and the iPhone 4 was significant, with a much better display, a different form factor, a much better camera and more. Each generation of smartphone is still better than the last, with a faster processor and often a slightly improved screen, but we have now reached the point where most people just don’t notice the difference. Can you really spot the improvement from a 280ppi to a 300ppi display? Or the difference between a quad-core and octo-core processor?
A broken screen and fading battery may still push many people towards upgrades when their contract runs out, but as the British public tightens their collective belts as Brexit starts to hit, one can expect that mobile phone upgrades every two years may soon be every three or four years instead.
The big four mobile operators, EE (BT), Vodafone, Three, and O2 currently make a large part of their profits from convincing users to take up expensive £30+ per month contracts to get the latest smartphone, and this has made them very profitable over the last decade. But as consumers look to hold onto their smartphone for another 12 or 24 months and save money by moving to a Sim-only plan – they are increasingly looking to mobile virtual network operators (MVNOs) for their deals.
These virtual networks like Giff Gaff, Tesco Mobile, Asda Mobile, and iD do not have the expensive 2G/3G/4G mobile infrastructure to maintain, and instead buy access to the networks of the ‘big four’ in bulk, and pass on those savings to the price-conscious customer – mostly in sim-only contracts that last either 30 days or 12 months.
Buying a standard plan with the latest iPhone or Samsung Galaxy S8 can set you back over £40 per month in a 24-month contract, but for those looking for a cheaper alternative you can often get the same data allowance and number of minutes and texts in a sim-only deal for under a tenner or sometimes even for a simple one-off fee as the MVNOs compete and prices reach record lows.