4 Smartphone Upgrade Pitfalls For SMBs

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I can see light at the end of my wireless contract tunnel.

My two-year agreement with Verizon comes up next March. That means I recently entered that end-of-contract phase when Verizon will gladly sell me a heavily discounted phone now to lock up my business until 2015. I would have paid $649.99 for an iPhone 5 just last week. Today, Verizon would foot all but $199.99 of the bill. The reason, of course, is simple: the discount requires a new two-year contract. And if I sign one now, it eliminates the chance that I'll move to a different provider in a few months.

I'm not in a huge hurry. Along with my laptop, my smartphone is easily the business tool I rely on most from a hardware perspective. The wrong choice would be a daily problem. This is also one of the rare times when I have a least a hint of leverage with wireless providers. The longer I wait, the more choices I'll have -- which is about as much leverage as SMBs get when buying business technology at retail.

Though my current Droid X might be unfashionable, it still gets the job done. I'm stuck with 3G, but that hasn't been a pressing business problem. It's fine for most of my common use cases: voice, email, social media, and mobile Web browsing. Would I like a faster phone? Sure, but there's no urgent need for speed.

[ For more advice on choosing a smartphone, see Low Smartphone Prices Hide Expensive Tradeoffs. ]

Fashion aside, however, my phone is showing predictable signs of wear and tear on a device that's approaching two years of regular use at work and home. The battery's shot. The touchscreen seems to be losing some responsiveness. In general, it's got that graybeard look-and-feel that all hardware tends to accrue as it approaches retirement age. An upgrade, sooner or later, seems inevitable.

When I do take the plunge, here are four pitfalls I'm hoping to avoid.

1. Ending Up With A Device I Don't Like.

It might sound obvious, but it's true: It would be bad to end up with a phone that's difficult to use, unreliable, or just plain unlikable. After all, you'll either be on a new contract -- and two years away from the next steep hardware discount -- or you'll have spent a chunk of change on an unlocked device. Even the relatively reasonable Nexus 4 from Google would be a difficult expenditure to walk away from unless you've got cash to burn. (My one-person business does not.) This scenario is avoidable, of course -- it just requires some due diligence before making a decision.

2. Paying Too Much.

Hardware, voice, and data cost plenty as is -- overpaying is just a flat-out waste. (And there aren't too many SMB success stories rooted in wasteful spending.) You won't see me shelling out for an unlocked iPhone 5, for example, because I probably won't get a business return on the $650 investment. Ditto for other full-price phones.

But even at subsidized prices, it's possible for SMBs and self-employed professionals to pay more than they need to. When I bought the Droid X, Verizon was selling it at a discounted price of about $100. Pretty standard stuff at the time, but a quick search on Amazon Wireless -- which was out in beta -- found the exact same phone for just $50. Did that $50 shave years off my target retirement date? Hardly, but I can't think of a compelling reason to not take the savings. The solution here is straightforward: Do the extra legwork to make sure you find the best price.

3. Losing My Unlimited Data Plan.

Alas, this one's not so much a mistake as a fact of mobile life. I'm grandfathered in with my unlimited data plan: 30 bucks a month buys me the privilege of not needing to pay any attention to how much bandwidth I'm using. Yet I'm not actually consuming that much data -- I don't watch movies or play many games on my phone, and there's only so much data one can use checking email during the day or sports scores at night.

Besides, that grandfather clause doesn't really exist. Unless it changes course, Verizon is ultimately going to phase out unlimited data whether I upgrade or not, to the chagrin of some of its customers. If I stay put with Verizon, my blissful ignorance of data consumption might need to come to an end one way or another, so I might as well get a better phone in the bargain. Otherwise, I'd need to switch carriers.

4. Getting Back On The Contract Treadmill.

If there's an OS treadmill, then the wireless contract treadmill is its equally grueling counterpart -- it will give your mobile budget a workout. Providers subsidize expensive hardware for a reason: We're paying them back -- and then some -- with those two-year contracts.

Indeed, the SMB Group's 2012 mobility study found that voice and data costs eat up more than half of mobile budgets at small businesses with under 100 employees. Hardware and software get much thinner slices in that pie chart.

These contracts are expensive. Plug even the most modest data cap into Verizon's Share Everything Plan calculator, and you're looking at $100 a month, plus taxes -- that's a $2,400 contract. Switching providers might offer lower rates – Verizon is known for its network, not its prices -- but then you could risk spotty service. And switching would still likely require a contract, even if it's a cheaper one. This is inherently at odds with number two above.

The alternatives, though, have their own downsides. I could ride this Droid X until it simply dies -- not a particularly appealing path. I could pay full price for the hardware, but that's a high price tag for flexibility. My best bet is probably an unlocked phone. I'm intrigued by Google's Nexus 4, but there are some concerns there, too: no LTE 4G, and the fact that its underlying specs would require a network switch. Switching networks isn't a deal breaker, but it's not necessarily something I'm eager to do. And then we're back to pitfall number one: I haven't actually had a chance to play with a Nexus 4 yet.

It's a good thing I'm not in a hurry -- this might take a while.

I'm curious to hear from readers on this topic. Am I overthinking this? Did I miss something? Care to share your own upgrade criteria? Email me, send me a tweet, or leave a comment below.

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