Deloitte predicts that one billion smartphones will be purchased as upgrades for the first time in 2015, generating almost £180 billion in sales. We expect global smartphone sales of about 1.4 billion smartphones in 2015, with about three-quarters of these being upgrades. In the UK, the proportion of smartphone upgrades is even greater. More than 90% of all smartphones sold in the UK will go to existing smartphone owners and the majority of smartphones owners will upgrade every one to two years.

The number of smartphones bought as upgrades is higher than for any other personal electrical device, with 24% of UK adults planning to upgrade their smartphone, compared to 18% of people upgrading their laptops and 14% their tablets.

Amongst all consumer electronic devices, the smartphone is the most personal: the most constant companion, the most personal of choices, the most customised and reflective of the owner, the least likely to be shared with other users, and the most frequently looked at. According to Deloitte's Mobile Consumer survey results, UK adults look at their phone, 33 times a day on average.

From a purely technical perspective, it might appear that existing smartphone owners do not 'need' a new device. But this assessment is too narrow; there is a wide spread of motivations, practical and emotional, which will drive the billion upgrades we anticipate for 2015 and the 1.15 billion for 2016.

In the near term smartphones will offer both an ever-wider range of functionality (such as a fingerprint sensor) and enhancement in existing functions (such as a better camera). A common reason for upgrading in 2015 will be to get a larger screen.

Peer pressure is likely to be a factor in many decisions to upgrade. It's not just the envy invoked from seeing friends and family with pristine new devices, bursting with brand new functionality; it's also the media news flow, with some new smartphone launches dominating the tech sections of websites and even featuring in national news bulletins.

The challenge for operators and device manufacturers

Just being in the smartphone industry is no guarantee of success, and the market is becoming increasingly competitive. The challenges for smartphone vendors: retaining loyalty, taking share in a maturing market, maintaining margin, and determining which functionality their customers want at each point in time, are likely to get steadily more acute over time.

Smartphone vendors may choose to work closely with operators. In markets with subsidies, upgrades have both advantages and disadvantages for operators. They need to fund the upfront device cost, but the upgrade also gives them a chance to lock in a customer, reduce churn and perhaps even sell them upgraded service levels.

Vendors will have to consider an increasing number of factors to nurture loyalty. As well as the technical specification of the device, many soft factors will also make a difference, from the availability of technical support, to the ease of transferring data between the old and new devices, to the calibre of the accompanying app store.