Smartphones are pricer than ever and every expert has a reason why
Ahh, the price we pay. It’s not just the fact that smartphone makers are creating fancier and more expensive phones these days, it’s that standard premium phones are costing more, too.
The iPhone 7 started at $649 while the iPhone 8 was at $699. The Galaxy S7 was also a $650 before it ballooned to $720 for the S8 and S9. Even worse for variants: the S7 edge was pegged from $750, the S8+ went to $785 and the S9+ started at a whopping $840. And remember the $300 value that was the OnePlus One several years ago? The OnePlus 6 may still be a value, but it is undeniably more expensive at $529 — and that’s for those who want just the one color there is at that price tier.
Data from market intelligence firm IDC shows that even as global smartphone shipments are trending downward, average sales price are forecast to rise more than 10 percent from last year to $345.
So, what’s going on here? Why are phones costing more and more each upgrade cycle nowadays and is there ceiling to this madness?
There are different points of view on this and CNET was able to gather one from Ben Wood, chief research analyst at CCS Insight.
“Consumers are prepared to pay a premium for a mobile phone because it is arguably the most important product in their lives,” Wood said.
Where does that premium come from, though?
OnePlus told CNET that “the increase in quality and components across the industry required” to match consumer demands is a key factor.
LG says every expense on its end is rising, from component costs to network partnerships and, yes, tariffs. Interestingly, the company notes that multiple device variants can help keep costs down, an interesting observation that goes against the conservative release plan the company outlined earlier this year.
CCS’s Wood, however, believes that desired margins have a large role to play. He took last fall’s iPhone strategy as an example.
“I certainly accept that some elements of the cost came from the components and the manufacturing process… but not to that order of magnitude. I also believe that Apple made a strategic decision to increase the price of the flagship iPhone to maximize the returns on a really amazing portfolio.”
As to how far up the ladder goes, Carolina Milanesi with Creative Strategies believes that people will settle as long as the phone is the most impactful piece of technology they have in their lives.
“As long as the phones are our main go-to computing device throughout the day, buyers will be willing to spend more,” said Milanesi.
“When Apple announced the iPhone X for a thousand bucks… they did the whole industry a favor,” said Wood. “That gave all the other manufacturers some breathing space and I can imagine there was a certain delight in the corridors of Samsung and Huawei and others.”