Replacement cycle among smartphone users is likely to be the most important variable factor to determine industry growth, particularly for the mid- to high-end categories. It is not easy to quantify exactly how often mobile subscribers purchase new smartphones, but IDC survey shows about 2-3 years globally.
More diversified/favorable subsidies (from telcos) such as lease-buyback would yield shorter replacement cycle (new phone every 18 months, etc.). For Indian telcos we think that the replacement cycle is 1.8 years and we see room for it to decline as smartphone price points reduce and consumption income increases.
