When purchasing a phone there is a decision to be made – whether to opt for pay as you go or to sign yourself up for a contract. In recent years, the number of people deciding on a SIM-only deal has almost eclipsed those who pay month-by-month. Data from YouGov research reveals that smartphone owners are now keeping the same phone for a longer period of time. In fact, SIM-only deals have been increasing in popularity faster than any other type of phone contract.
Looking at the data from the past five years, it’s clear that phone contracts are in decline in favour of SIM-only deals. While rolling contracts are still the most popular choice, the number of people opting for them has decreased every year, from 80% in 2010 down to only 67% today.
The nature of this change is clear to anyone that looks at the trend of phone ownership in recent years – customers are holding on to their phones for longer, and in doing so are less restricted to the yearly contracts that are typically bought into when purchasing a new handset. It is telling that back in 2010, almost 40% of customers had owned their handsets for less than six months, while in 2015 that number is less than 30%. Conversely, those who have owned their phones for longer than a year and a half have increased from 14% to 23%. The raw data can easily show us this recent trend. If we look into the dominance of smartphones in the mobile phone sector, it’s clear to see that while back in 2010 most mobile phone owners were in possession of a ‘feature phone’. Less than 20% were in possession of a smartphone. Newer models rapidly became available, vastly increasing functionality of the phone. Now in 2015, over 80% own a smartphone.
The reason for the change in contract phones is likely due to this phenomenon, that people are keeping their handsets for a longer period of time. In the last several years, innovation came rapidly and advanced phone technology, leading to customers wanting to upgrade their phones for the latest features. In the last few years, those innovations have stagnated, and only minor upgrades have appeared, leading most phone owners to disregard them and stick with the smartphone they have. This has lead to an increase in SIM-only deals, which avoid the problem of being stuck into an unfavourable monthly (or even yearly) contract.
This trend is bad news for companies, but they have their own strategies for dealing with the problem – Apple, a company known for intense brand loyalty, continues to release new models of its iPhone, and continues to try and innovate in regard to the features of its devices. While there is no evidence for the trend of contract phones to be on the increase, the phone companies will try their best.