2017 was a bumper year for flagship phones. The Galaxy Note series was back after the Galaxy Note 7 battery debacle, and Apple released the most expensive iPhone ever made. The flagship hype didn’t have much of an effect on the total number of smartphones sold, but it did make one big change to companies’ bottom line: The average selling price skyrocketed.
According to point-of-sale data from GfK, the average sales price for smartphones increased by 11 percent year-on-year in the last quarter of 2017. The vast majority of smartphones didn’t actually get more expensive, which leaves one logical explanation: The $1,000 iPhone X and $930 Galaxy Note 8 were enough to cause that average price increase.
Traditionally, the average price of a flagship smartphone has been somewhere between $600 and $700. That price has slowly crept up in line with inflation ever since the first iPhone. But in 2017, the trends shifted a little. The iPhone X starts at $999, the Galaxy Note 8 is $930, and even more “affordable” flagship phones saw a price increase, like the $849 Google Pixel 2 XL.
The price increases are largely being driven by more features crammed into bigger smartphones. The 5.5-inch OLED screens that are becoming commonplace are far more expensive to research and manufacture than the smaller LCD screens they replace, and advanced sensors like the TrueDepth camera on the iPhone X add up as well.
Arndt Polifke, Global Director of PoS telecom research at GfK, comments, “Smartphone year-on-year demand growth moderated for the fourth consecutive quarter, rising only one percent to 397 million units in 4Q17. However, sales value increased by 11 percent year-on-year in the quarter, which is exceptional growth for such a mature technology category. This came as the proliferation of smartphones with larger and bezel-less displays incentivized consumers to purchase more expensive devices.”