Those looking for clues to the mobile phone market's future might find some lessons in the experiences of the personal computer industry. If history repeats itself, wireless phone makers will likely discover that the replacement market grows at a much slower rate, produces lower profit margins than original products, and creates buyers who are more knowledgeable and particular about their purchases the second time around. Now is the time to really lock up consumers to gain their loyalty. But in many consumer electronics markets, replacement buyers typically cling to older technology that they have already paid for unless particularly compelling new products emerge. Still, frontline troops in the wireless sales wars say there is hope the second time around.
People trade in mainly because of the size and the battery life.
The analog phones were like bricks. They want a smaller, lighter phone that's easier to carry. As seen in the PC business, markets based largely on replacement sales begin to mature and often consolidate around a few major providers, economists say. Price competition then drives profit margins lower, and unit shipments level off from the headier early days. PC makers saw tremendous growth in the 1980s.