SCAM ALERT: Forced Obsolescence of Smartphones

It used to be that you’d buy a smartphone based upon price and features.  But now there’s a new factor that you must put into your equation: forced obsolescence.  Increasingly, smartphone manufacturers are forcing consumers to buying new phones or mobile devices after two years — and they are doing it in the most unsavory way.   For example, Apple stands accused of engaging in a marketing practice known as “planned obsolescence” – a method of making products with shorter lifespans, or making current generation products seem obsolete in order to sell a “new and improved” version. A petition created by online consumer group SumOfUS in July accused Apple of “sabotaging” devices with software upgrades designed to significantly slow down older models and force users to upgrade.  (the petition has since been signed by over 300,000 users urging Apple to extend the lifespan of their devices).  And Apple even got sued for this practice, in Brazil.  Another class action case filed in California  charges Apple with forcing owners of the Apple iPhone 4 and Apple iPhone 4s to update to iOS 7.0.4, a build that the older models could not run smoothly. Many of these older units crashed while trying to run the new software. In particular,  Apple disabled FaceTime on the older iOS builds. As a result, the suit claims that Apple violated California’s unfair competition clause.

But it’s not just Apple.  Google announced last year that it was terminating its support of its Nexus devices after only two years.   Most of the Nexus mobile devices will lose their security fixes at the end of 2017, rendering them vulnerable to hackers and nasty malware.   Without security patches, the phones become almost useless.  Moreover, the Nexus devices are not eligible for OS upgrades to the latest Android platform versions, thus reducing their usefulness.

Apple, Samsung and Google have also used limited battery life as a way of forcing obsolescence.  The devices battery, which, like all rechargeable batteries, has a finite number of charges, runs down much faster by the time service providers offer a subsidized upgrade. Apple makes it difficult for customers to remove and replace iPhone batteries at home, since the batteries are sealed into the phone body with special five-point screws.  Similarly, Google devices do not allow for replacement of the rechargeable batteries.  For heavy users,  you can excpect about one good year before your battery starts to poop out. For most other people, the average is about two years when it shows significant signs of wear and tear.  By year 3, your battery becomes effectively nonfunctional and you must invest in a backup charger in order to use your phone.

All of these tactics to force consumers to replace perfectly good two-year-old smart devices is not a total surprise.  In a notable paper from 1986, economic Jeremy Bulow asserted that a monopolist not threatened by entry would have an incentive to produce goods with “inefficiently short useful lives.” But if consumers have the option to switch to good substitutes — as arguably they do now in the smartphone market — the incentives could run in the opposite direction. Your company might capture a larger share of the market if consumers believe your products are more durable.  Consumers faced substantial “switching costs” if they wanted to flee to your competitor, that could also increase your incentives to limit durability. For example, iPhone users would lose iOS-compatible apps they’ve bought if they switch to Android phones. These network effects could increase Apple’s incentives to force its existing customers to upgrade by making older models gradually become more dysfunctional – but again, that’s assuming Apple believes it can practice such Machiavellian scheming without damaging its brand too much.

There are ways of fighting back against these tactics.  For example, a few smartphone manufacturers sell phones that allow for removable batteries.  Second, look for manufacturers who commit to long support windows for their products.  Motorola and HTC are among some of the better manufacturers on this front.  You may also want to look at the supported models with Cyanogenmod/LineageOS or Ubuntu platforms. Its probably the best you get with long term support.  Or simply understand that you may be spending $700 or more for a device that will be a paperweight in two years — so perhaps you want to spend your hard-earned money on unlocked middle-tier smartphones that cost less than $500, such as the OnePlus 5T, MotoG5 ro Moto X Force, ZTE Axon, HTC One, LG G6, or one of the Xiaomi phones, if they are available in the U.S. 

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