What can you do to save your contract phone that may be phased out?

For users who are used to buying bare-metal phones, it is necessary to introduce what contract phones are at the beginning. Contract phones refer to the type of mobile phones that are jointly customized by telecommunications operators and mobile phone manufacturers. Users usually only need to deposit a certain amount of money in the name of saving phone bills and sign a contract with the corresponding operator to get a mobile phone at a low price or even for free. Generally speaking, contract phones cannot change cards. After changing the card, the phone will be locked and the phone bills will not be refunded. In serious cases, liquidated damages will be required. Despite the many restrictions, contract phones still have many advantages over bare-metal phones, such as guaranteed product quality and a supply of popular mobile phones. The most important thing is that you can pay less or no phone bills for a long time after signing the contract. In other words, the cost of purchasing a phone is reduced a lot.

The difference between contract phones and custom phones

It should be noted here that contract phones are not completely the same as another concept that everyone is familiar with, namely “custom-made phones”.

A customized phone usually refers to a version that a manufacturer has customized for a specific operator. The phone will have the operator's logo printed on it, operator software services pre-installed, and may even block other operators' network standards. However, it is not necessarily sold as a contract phone, but may be sold as a bare phone. But the price is cheaper than non-customized models.

For operators, the existence of customized phones effectively increases long-term users. Even after their mobile phone contracts expire, these users rarely choose to change operators due to issues with their numbers or habits. This helps operators to bind consumers to a considerable extent, playing an important role in expanding consumption and enhancing their voice in terminal manufacturers.

However, in recent years, with the rise of thousand-yuan and hundred-yuan phones, contract phones are far behind in terms of configuration and functional experience, and the number of users willing to buy them has also decreased sharply. As a result, operators have also begun to reduce subsidies in this regard, which has directly led to the decline of mobile phone manufacturers that rose on contract phones. So, is there really no meaning for contract phones to exist?

Defects of contract phones

Thousand-dollar phones are the new trend

Since the smartphone market entered a period of rapid growth in 2010, it has maintained rapid growth until 2015, but the growth rate has obviously slowed down gradually, especially this year. IDC's estimated growth rate has dropped to 12.45%, far from the 47.6% three years ago.

However, despite the slowdown in growth, market competition has not abated at all. This is especially true for the thousand-yuan phones that have become popular since 2014. Their configurations have become higher and higher. Attributes that were previously only available on high-end phones, such as metal bodies, fingerprint recognition, and phase focus, have all been delegated to lower-end phones. This has had a huge impact on contract phones that rely solely on phone bill subsidies and are not known for their configuration experience. Even the middle-aged and elderly people who are not so sensitive to configuration can tell the difference from the tens of millions of pixels, eight-core processors, and high-definition large screens on the labels. As for the extra one or two hundred yuan, it is really not worth mentioning for people today.

Reduced operator subsidies

To make matters worse, in 2014, the State-owned Assets Supervision and Administration Commission required the three major domestic operators to reduce their marketing expenses by 20%, and this reduction was to be continued for three years, with a total reduction of more than 40 billion yuan. A large part of this reduction was to reduce subsidies to mobile phone manufacturers, which hit the core competitiveness of contract phones.

And because people are used to the low prices brought by operator subsidies, manufacturers not only do not pay attention to the experience of contract phones, but also pre-install a lot of operator services or applications that cannot be uninstalled, which seriously drags down the already low-configuration phones, so their reputation among the public has always been poor.

On the contrary, the weakness of contract phones has given e-commerce and offline channels new opportunities, ushering in a golden age of sales for OPPO, vivo, and Gionee, which have always attached great importance to offline dealers.

The squeeze of multi-channel installment payment

At the same time, the installment payment model also provides users with tight funds with a new option for purchasing mobile phones, especially when installment services such as Fenqi Le, Hao Fenqi, and Qu Fenqi started to move from campus to 5th and 6th tier cities, and JD.com and Tmall launched Baitiao and Huabei loan services, which hit contract phones hard both offline and online. Users no longer have to endure bad contract phones because of temporary financial constraints.

The "gold owner" is no longer playing

As a new generation of young people gradually become the backbone of consumption, the old model of buying phones by going to a business hall to buy a contract phone is no longer popular. Especially after the rise of e-commerce and Internet phones priced at thousands of yuan, the necessity for users to buy contract phones is almost zero.

For operators, canceling subsidies for contract phones has limited impact, because China Unicom, which needs to develop the most to compete with China Mobile, has gained a lot of stable customers in the 3G era with contract phones, especially iPhone contract phones.

In fact, no matter where users buy their new mobile phones from, they must eventually be connected to the network. Operators can transfer the money to package discounts and reduced call charges, which can also attract customers to choose.

How do foreigners play?

This is not an isolated case in China. In August 2015, Verizon, the largest mobile operator in the United States, announced that it would stop providing subsidized contract phones to new users and no longer require users to sign a two-year contract. T-Mobile and Sprint, two other operators in the United States, also announced that they would abandon the contract phone model, while AT&T only sold contract phones in a limited range and focused more on promoting non-contract packages.

As for Apple as a manufacturer, it also launched the "iPhone Upgrade Program" service when it released the iPhone 6s (click this link to learn more). Users only need to sign a contract with a minimum monthly payment of US$32 to enjoy the benefit of replacing an unlocked new iPhone for free every year. They can also choose operators according to their needs and preferences, and bundle the Apple Care+ service.

This has many benefits for Apple, such as getting more people to use the high-profit Apple Care+, binding customers to the iPhone camp, shortening the iPhone upgrade cycle from 24 months to 12 months, controlling the second-hand iPhone market, etc. According to a survey report released by analysts at a US investment bank not long ago, 34% of the 118 consumers who bought iPhone 6s in November chose Apple's upgrade plan, and the proportion is still rising.

Do contract phones still have a future?

Having mentioned so many disadvantages of contract phones above, does that mean this model of purchasing phones will disappear and have no meaning to exist? The answer is not necessarily.

Imitate the old permanent contract phone

For example, the Apple "iPhone Upgrade Program" service mentioned above is essentially a new way to play with contract phones. It changes the user's contract partner from the operator to the mobile phone manufacturer in a manner similar to leasing, which not only improves user stickiness but also increases profit margins. Although this service is currently only available in the United States, there is no guarantee that it will not be launched in China in the future, or that it will be learned and followed by Chinese manufacturers.

Considering the increasing frequency of phone replacement nowadays, once similar services are launched, it will inevitably become the last straw that breaks the camel's back for operators' contract phones. But in a sense, it also gives "contract phones" a new life, which is welcomed by both mobile phone manufacturers and consumers.

Bundle more discounts and create a content ecosystem

As for the pure operator contract phones, increasing discounts and expanding service areas are one of the few ways out. For example, the LeTV 1s contract phone launched by LeTV and China Unicom some time ago is a good example. In addition to the traditional prepayment of phone bills to get a free phone, and prepayment of 99 yuan for old customers who have been online for more than 2 years, it also launched a "phone + tariff + data + membership" contract model, that is, on the basis of the traditional monthly rebate, you can get a one-year LeTV full-screen movie membership at a price of 190 yuan, and get 6GB of free targeted data per month for one year.

Optimize software and hardware experience

More importantly, contract phones should seriously improve the user experience. In terms of hardware, in addition to actively introducing popular thousand-yuan and hundred-yuan phones on the market, higher requirements should also be placed on manufacturers with whom we have worked closely in the past, at least to match the mainstream configurations on the market, and we should not just think about reducing costs without considering the user experience.

In terms of software, it is not impossible for operators to pre-install their own applications, but they must at least give users the right to uninstall them. In addition, if they want to truly strengthen and expand their own software services, they should open their eyes and see how popular applications are made. Only when the experience and promotion are good will people be willing to use them. Blindly pre-installing applications will only backfire.

At the same time, we must also urge manufacturers to provide follow-up value-added services for contract machines, especially system updates and improvements. We can no longer just sell the machines and ignore them as we did in the past.

Summarize

Judging from the current trend, due to subsidy policies, changes in user consumption habits and the rise of phones priced at thousands of yuan, operator contract phones have almost come to an end. Even if they spend a lot of effort to improve them, they will not be able to restore their former glory.

But this is not a bad thing. The fact that operator contract phones are no longer popular has given various mobile phone manufacturers a fair chance to compete in the market. Those manufacturers who are serious about making products and focus on user experience are more likely to stand out, which is beneficial to both the development of the industry and the interests of consumers.

However, the contract-based phone binding method will not disappear. Instead, it has created a new feeling in the hands of mobile phone manufacturers. Apple is just a pioneer, so let's wait and see what happens!

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.