The second fiscal quarter of 2016 is winding down for most companies, and US carriers are likely beginning to prepare their statements and getting everything ready for their earnings calls, a number of which are set to happen at the end of this month or in August. Naturally, this is around the time that industry insiders and analysts will begin throwing their predictions into the pot, giving the carriers a bit of insight as to how they should present their earnings calls. Analyst firm Evercore seems to be setting the bar on the low side for US carriers this quarter, mainly due to somewhat slow growth and an increasingly long period between upgrades as phones get better and it becomes harder for consumers to find compelling reasons to upgrade, as well as an industry-wide shift over to equipment installment plans.
Evercore points to three main reasons for stagnant carrier growth for the second quarter, a time that’s usually already fairly slow. They claim that the industry is reaching maturation, meaning that, at this point most people that are interested in a smartphone, plan for one or can afford one, already have one. They also point to the lack of an iconic device this quarter, with the Samsung Galaxy S7 launching in the first quarter of the year. Although the HTC 10 launched in the second quarter, HTC’s brand does not seem to make the cut to be called ‘iconic’ in Evercore’s book, which based on early numbers could be a valid point given the HTC 10’s subpar sales. Finally, they point to carriers’ focus shifting away from grabbing new subscribers and instead moving to keep subscribers and squeeze as much value as possible from them. While this is a sound business model in and of itself, choosing slow growth over high growth couple with loss of some current subscribers can come with its own set of issues.
As phones improve, consumers are already inclined to keep their devices a bit longer than in previous years. Some of the big devices from 2014, such as the Samsung Galaxy S5 and Nexus 6, not only persist, but remain popular options for a new phone for those on a budget. Evidence of their popularity can be found on the development scenes, where new mods, kernels and custom ROMs are still being cranked out on a near-daily basis. On the Apple side of things, many still cling to the iPhone 5S, even in the face of the iPhone SE, and many consumers still love the iPhone 6 lineup, given its minimal differences from the 6S family. Not only that, but when consumers become conscious of what they’re paying for a device and how long until it’s paid off, they’re likely to at least want to keep the device until it’s paid off.