How Much Will You Pay To Upgrade To That Shiny New Smartphone?

February 25, 2013 11:47 am

Here is a problem all of us have: we bought the latest and greatest smartphone / tablet / 5InchPlus device (phablet) from company X (okay, Apple / Samsung). Three to four months down the line, a better product is announced, and in a couple of months from then, the shiny new device hits the market, and we can see people carrying it around. We all feel like losers, at times ashamed to pull out our own device – the same device we pulled out at the first available opportunity when it was the latest and greatest (which was just a few months ago).

Here is the opportunity – there is definitely an amount X that each one of us is willing to pay, for upgrading to the shiny new device. But such upgrade mechanisms do not exist today. So for example, when the iPhone5 came out, millions of iPhone 4s owners would have been swipe-ready with their credit cards if asked to pay say $75 for an upgrade to the new device. Or $100. We don’t know.

The situation is ‘guess what, our hands are tied’ in the US with the operators more or less dictating stuff – but it is getting better, and outside the UA, in many markets, the operator issue does not exist in the first place. There are two parts to this problem:

(a) Determine the price X for a given product upgrade scenario (say, Samsung Galaxy 2 to Galaxy 4 upgrade) and
(b) Figure out a return / resell / reuse mechanism for the old device so that the difference between (bulk purchase price for new device) and (recovered cost of returned device) is net positive.

Pieces of this puzzle have been solved – particularly (b) where you can send your unused iphones etc. But the puzzle obviously is yet to be solved. Potentially this could be a multi-billion dollar opportunity, given the fact that there are half-a-billion android devices and half-a-billion iOS devices on the planet, all of which will be obsolete in a few months from now.

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