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Deloitte predicts 1 billion smartphones will be purchased as upgrades in 2015, generating over $300 billion in sales for manufacturers.

The old tagline “more than one billion served” was an advertising success years ago for one of the world’s leading fast-food restaurant chains. For the major players in the telecommunications industry, that catchphrase could well be updated to “more than one billion re-served.”

Deloitte’s 14th annual Technology, Media and Telecommunications (TMT) Predictions report forecasts that in 2015 the number of smartphones purchased as an upgrade for an older phone will, for the first time, exceed 1 billion. This is just a couple of years after global smartphone sales exceeded 1 billion for the first time.

Consumers and the industry have witnessed almost exponential growth in smartphone sales and upgrades over the past several years. The smartphone base should rise from 1.8 billion in 2014 to 2.2 billion this year,¹ with sales expected to reach 1.4 billion in 2015. Seventy percent of those sales will likely come from upgrades, according to Deloitte.

Without question, the smartphone is the most successful consumer device ever. In fact, unit sales and revenues are expected to surpass the PC, television, tablet, and games console sectors combined.² And sharp growth in smartphone sales should continue through 2018, according to Deloitte research conducted in mid-2014 in 14 developed countries.

Why Consumers Upgrade

Assessing the smartphone upgrade market from a purely technical perspective, Deloitte researchers conclude many existing owners don’t actually “need” a new device. But they also acknowledge myriad practical and emotional considerations will fuel the billion upgrades projected by Deloitte for 2015, and the 1.15 billion anticipated in 2016.

The device replacement cycle for smartphones is shorter than for any other consumer electronic device. The allure of better, faster, more responsive devices is hard to resist. The smartphone is the most personal of consumer electronics devices: the owner’s constant companion, the most customized and reflective of the owner’s style, the most frequently noticed by others—and the one least likely to be shared. Not surprisingly, then, peer pressure also comes into play.

Replacing a smartphone on the basis of looks may seem superficial, but it factors strongly in consumers’ upgrade decisions. As better-quality materials—metals, plastics, even bamboo—become available, devices are getting not only more resilient, but also more attractive. New screens tend to be stronger, and smartphones are increasingly resistant to water and dust.³

Every year, the newest smartphones also incorporate faster processors and more random access memory (RAM). As software becomes more complex, the processor and memory in an older device increasingly struggle to support existing and new functions.

Other considerations for consumers looking to upgrade their smartphones in 2015 may include: larger screens for easier browsing; access to technical support; the ease of transferring data between old and new devices; and the perceived security of data.

Implications for CIOs

Upgrading smartphones within an enterprise presents CIOs with a mix of challenges and opportunities. For some companies, offering the most current smartphone technology may be part of a broader strategy to attract and retain top talent. On a practical level, new generations of smartphones that are more resilient and waterproof may support field work; new features, such as fingerprint readers, could help attain security objectives. Broadly speaking, the issues CIOs will need to consider include: 1) how to make the most of new device and operating system capabilities; 2) whether to run enterprise apps on a new generation of higher performance devices; 3) how to make the most of new security features and avoid introducing new security risks; and 4) how to manage increased costs from device purchases and communications.

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Even for an industry already recognized for spectacular technological innovation and runaway customer sales, passing the 1 billion mark in smartphone upgrades in 2015 stands as a special achievement. The impact of this trend is only beginning to be assessed in consumer markets and corporate C-suites.

Editor’s note: We will explore the implications of smartphone upgrades for CIOs in greater depth in an upcoming story.