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Your Aging Smartphone Might Be Dragging Down the Whole Economy

MarketDash Editorial Team
4 hours ago
Americans now keep their phones for 29 months instead of replacing them annually, and economists say this seemingly rational consumer behavior could be quietly chipping away at productivity growth across the economy.

Here's a question nobody asked for: What if your decision to squeeze another year out of your perfectly functional smartphone is actually hurting the economy? Turns out, it might be.

For years, phone manufacturers pushed the annual upgrade cycle hard. New cameras. Brighter screens. AI features you'll use twice. The marketing playbook was simple: make last year's model feel ancient. But Americans have quietly opted out of that game. The average smartphone now stays in service for about 29 months, according to a recent Reviews.org survey. Back in 2016, that number was closer to 22 months.

This seems like rational behavior. Phones are expensive, and the improvements year-over-year have gotten less dramatic. The average person now spends around $634 on a phone, well below the $1,000-plus flagships that dominate the headlines. When your current device still works, why drop another $800?

Take Heather Mitchell, a 69-year-old from Tucson, Arizona, who's still rocking a six-year-old Samsung Galaxy A71. "A new phone would be a luxury," she told CNBC. She plans to use it until it literally stops working. Hard to argue with that logic.

The Hidden Productivity Cost

Except economists are starting to argue with it. Or at least, they're noticing the consequences. According to Federal Reserve analysis, when businesses delay technology upgrades by just one additional year, productivity drops by roughly one-third of a percent. That might sound trivial until you scale it across entire sectors. The Fed estimates that investment patterns like this explain more than half of the productivity gap between advanced economies.

The issue isn't just personal preference. Businesses, especially outside the U.S., are holding onto hardware longer too. And older devices simply can't keep up with modern demands. Cassandra Cummings, CEO of Thomas Instrumentation Today, explained the speed mismatch to CNBC: "In the 2010s, 100 Mbps speeds were considered high speed and very good. A short 10 years later and we're operating at 1000 Mbps speeds, which is roughly 10 times faster." Hardware from a few years ago wasn't designed for that kind of throughput.

There's another wrinkle. When large numbers of people use outdated devices, phone and internet networks have to remain backward-compatible. That means throttling performance to accommodate slower hardware, which drags down everyone else. Entire sections of networks end up running below their potential capacity, according to Cummings.

Workers Feel It Too

The workplace impact is measurable. Research from technology solutions provider Diversified found that 24% of workers stay late or put in overtime because their technology is outdated. Even worse, 88% say aging devices actively limit their ability to innovate. You'd think that would create pressure to upgrade, but human nature gets in the way.

"Employees look at replacing devices within an organization as too tedious and people cringe when the IT department comes with a new device," Jason Kornweiss, a senior vice president at Diversified, told CNBC. Learning new systems feels like a hassle, so people resist even when the upgrade would help.

Kornweiss also pointed out that keeping pace with technology is especially hard for smaller businesses. "Corporations with hundreds or thousands of people are not investing at the same rate," he said. The gap between what technology can do and what companies actually deploy keeps widening.

All those little inefficiencies compound. Slower multitasking. Extra steps to complete basic tasks. Minutes lost here and there across hundreds or thousands of employees. Over time, that adds up to real economic drag.

Could Repair Culture Help?

Some industry voices think the answer isn't necessarily buying new phones more often, but building better systems around the phones we already have. Steven Athwal, CEO of The Big Phone Store, told CNBC that the real problem isn't device age—it's how we handle aging devices.

Better repairability, easier access to parts, and longer software support could keep older phones viable without sacrificing performance. "If governments and big tech supported refurbishment properly, aging devices could become part of a sustainable circular economy," Athwal said. That would potentially reduce waste while keeping more people aligned with current technology standards.

People Still Want New Phones—Just Not as Often

Despite longer upgrade cycles, consumer interest in new technology hasn't vanished. Apple's iPhone 17 launch was reportedly one of its strongest in years. Faster performance and better battery life remain top reasons people eventually replace their devices.

The difference is that upgrades now happen out of necessity rather than novelty. People wait until their phone actually fails, or the performance gap becomes unbearable. It's easier on household budgets, which makes perfect sense for individuals.

But economists are increasingly pointing out the collective cost. When millions of people make the individually rational choice to delay upgrades, the aggregate effect on productivity starts to show up in the data. It's the kind of economic trade-off that doesn't make headlines but might matter more than we think.

Back to News

Your Aging Smartphone Might Be Dragging Down the Whole Economy

MarketDash Editorial Team
4 hours ago
Americans now keep their phones for 29 months instead of replacing them annually, and economists say this seemingly rational consumer behavior could be quietly chipping away at productivity growth across the economy.

Here's a question nobody asked for: What if your decision to squeeze another year out of your perfectly functional smartphone is actually hurting the economy? Turns out, it might be.

For years, phone manufacturers pushed the annual upgrade cycle hard. New cameras. Brighter screens. AI features you'll use twice. The marketing playbook was simple: make last year's model feel ancient. But Americans have quietly opted out of that game. The average smartphone now stays in service for about 29 months, according to a recent Reviews.org survey. Back in 2016, that number was closer to 22 months.

This seems like rational behavior. Phones are expensive, and the improvements year-over-year have gotten less dramatic. The average person now spends around $634 on a phone, well below the $1,000-plus flagships that dominate the headlines. When your current device still works, why drop another $800?

Take Heather Mitchell, a 69-year-old from Tucson, Arizona, who's still rocking a six-year-old Samsung Galaxy A71. "A new phone would be a luxury," she told CNBC. She plans to use it until it literally stops working. Hard to argue with that logic.

The Hidden Productivity Cost

Except economists are starting to argue with it. Or at least, they're noticing the consequences. According to Federal Reserve analysis, when businesses delay technology upgrades by just one additional year, productivity drops by roughly one-third of a percent. That might sound trivial until you scale it across entire sectors. The Fed estimates that investment patterns like this explain more than half of the productivity gap between advanced economies.

The issue isn't just personal preference. Businesses, especially outside the U.S., are holding onto hardware longer too. And older devices simply can't keep up with modern demands. Cassandra Cummings, CEO of Thomas Instrumentation Today, explained the speed mismatch to CNBC: "In the 2010s, 100 Mbps speeds were considered high speed and very good. A short 10 years later and we're operating at 1000 Mbps speeds, which is roughly 10 times faster." Hardware from a few years ago wasn't designed for that kind of throughput.

There's another wrinkle. When large numbers of people use outdated devices, phone and internet networks have to remain backward-compatible. That means throttling performance to accommodate slower hardware, which drags down everyone else. Entire sections of networks end up running below their potential capacity, according to Cummings.

Workers Feel It Too

The workplace impact is measurable. Research from technology solutions provider Diversified found that 24% of workers stay late or put in overtime because their technology is outdated. Even worse, 88% say aging devices actively limit their ability to innovate. You'd think that would create pressure to upgrade, but human nature gets in the way.

"Employees look at replacing devices within an organization as too tedious and people cringe when the IT department comes with a new device," Jason Kornweiss, a senior vice president at Diversified, told CNBC. Learning new systems feels like a hassle, so people resist even when the upgrade would help.

Kornweiss also pointed out that keeping pace with technology is especially hard for smaller businesses. "Corporations with hundreds or thousands of people are not investing at the same rate," he said. The gap between what technology can do and what companies actually deploy keeps widening.

All those little inefficiencies compound. Slower multitasking. Extra steps to complete basic tasks. Minutes lost here and there across hundreds or thousands of employees. Over time, that adds up to real economic drag.

Could Repair Culture Help?

Some industry voices think the answer isn't necessarily buying new phones more often, but building better systems around the phones we already have. Steven Athwal, CEO of The Big Phone Store, told CNBC that the real problem isn't device age—it's how we handle aging devices.

Better repairability, easier access to parts, and longer software support could keep older phones viable without sacrificing performance. "If governments and big tech supported refurbishment properly, aging devices could become part of a sustainable circular economy," Athwal said. That would potentially reduce waste while keeping more people aligned with current technology standards.

People Still Want New Phones—Just Not as Often

Despite longer upgrade cycles, consumer interest in new technology hasn't vanished. Apple's iPhone 17 launch was reportedly one of its strongest in years. Faster performance and better battery life remain top reasons people eventually replace their devices.

The difference is that upgrades now happen out of necessity rather than novelty. People wait until their phone actually fails, or the performance gap becomes unbearable. It's easier on household budgets, which makes perfect sense for individuals.

But economists are increasingly pointing out the collective cost. When millions of people make the individually rational choice to delay upgrades, the aggregate effect on productivity starts to show up in the data. It's the kind of economic trade-off that doesn't make headlines but might matter more than we think.