Americans are holding onto devices longer than ever and it's costing economy

Americans and businesses are holding onto smartphones and equipment longer—average phone tenure is now 29 months versus about 22 months in 2016—which, while easing household and corporate cash flow, is creating measurable productivity costs: Federal Reserve research finds each additional year firms delay upgrades reduces productivity by roughly 0.33% and investment patterns explain about 55% of productivity gaps between advanced economies (with hypothetical reductions of 29%, 35% and 101% for the U.K., France and Germany if they matched U.S. reinvestment). Older devices also force networks to run slower for backward compatibility, raise repair and maintenance burdens, and create a workplace productivity drag (Diversified research: 24% of employees work late due to aging tech and 88% say inadequate tech stifles innovation), while the refurbished-device market and policies such as longer software support, modular design, BYOD and leasing present avenues to mitigate economic loss and enable a more sustainable circular economy even as new product cycles and AI features continue to entice replacements.

Analysis

Consumer and corporate device lifecycles are lengthening: the average American now keeps a smartphone for 29 months versus about 22 months in 2016, and the article cites Federal Reserve research that each additional year firms delay equipment upgrades reduces productivity by roughly one-third of a percent while investment patterns account for about 55% of productivity gaps between advanced economies. The Fed study's counterfactuals — suggesting U.S.-style reinvestment since 2000 would have cut the productivity gap by 29% in the U.K., 35% in France and 101% in Germany — underscore that underinvestment in hardware translates into meaningful national-level output losses.

Businesses and networks bear disproportionate costs: older devices force backward-compatibility throttles on cellular and internet infrastructure, and workplace data from Diversified shows 24% of employees work late because of aging tech while 88% say inadequate technology stifles innovation. Executives and entrepreneurs interviewed argue the repair/refurbishment market is growing but underregulated and underutilized, and remedies highlighted include longer software support, modular/repairable designs, BYOD and leasing as mitigation paths.

Market demand is bifurcating: successful product launches (the iPhone 17 is cited) and AI-driven features can entice upgrades, yet many consumers and companies delay replacements to conserve cash. This dynamic creates both downside risks to aggregate productivity and upside opportunities for refurbishment, repair, leasing and software-support providers, making corporate capex patterns, software support windows and regulatory moves on right-to-repair relevant near-term indicators.

Key Decisions for Investors

• Consider modestly increasing exposure to companies and service providers in device refurbishment, repair, leasing and enterprise device management where revenue should rise as aging hardware requires servicing
• Monitor corporate IT capex trends and software support lifecycles as leading indicators of looming productivity drag; underinvestment flags potential operational risk for firms reliant on desk-bound productivity
• Watch telecom and network-equipment vendors’ upgrade spending and product road maps since operators investing to reduce backward-compatibility throttles should gain efficiency advantages, while those deferring upgrades may face higher churn or regulatory scrutiny
• Track policy and corporate initiatives around right-to-repair, extended software support and circular-economy programs because government or big-tech backing could accelerate the regulated refurbishment market and change competitive dynamics