The effects of price, popularity, and technological sophistication on mobile handset replacement and unit lifetime

Modeling the sales and replacements of technology products is typically carried out at the aggregate product category level. However, with maturing markets and especially with high-technology products, the ever-increasing variety of differentiating product features calls for more detailed analysis. This article presents evidence on the effect of price, popularity, and technological sophistication on unit replacement and lifetimes of mobile handsets. The analysis is conducted with a unique device model specific dataset from the Finnish market, with monthly mobile handset unit sales from 2003 to 2009 and annual installed bases from 2005 to 2012. The results show that median unit lifetimes decreased during the second half of the study period, indicating a structural change in the mobile handset market. Furthermore, handset models with higher technological sophistication were shown to have explanatory power on unit lifetimes. During the first half of the study period, more popular handset models were also associated with longer unit lifetimes and models with complex flip design with shorter lifetimes.