Apple’s smartphone rivals take many cues from the iPhone maker, whether it be bezel design or that much-maligned notch. Another more unfortunate feature that’s inspiring competitors, however, is the sky-high price tag.
Ben Wood, chief research analyst at CCS Insight, wondered aloud to a CNET reporter about the possibility of an iPhone X Plus model costing $1,200. Why not? There would be an immediate massive outcry on social media, he speculated — “What an outrage!” — and then quietly “people will go off and buy it.”
Indeed, we learned in recent days via Apple’s latest quarterly earnings call that the iPhone X, the base model of which starts at essentially $1,000, has outsold every other iPhone model since first going on sale in November. That’s one example analysts in recent days have been pointing to to all make the same point: this is going to keep happening, smartphone makers hiking the price of their most expensive models, and it’s partly your fault. The fault of consumers who need the latest, feature-packed release, always.
Analysts like Wood also point to flagship device price increases this year from manufacturers like Samsung, Huawei and OnePlus. Indeed, the average selling price of smartphones is expected to be up 10.3 percent this year compared to 2017, even with overall smartphone shipments falling in 2018. That’s according to IDC’s Worldwide Quarterly Mobile Phone Tracker.
“Consumers are prepared to pay a premium for a mobile phone because it is arguably the most important product in their lives,” Wood told CNET.
It’s not just the increased cost of manufacturing the device and adding new components to improve the camera, battery life, processing power and more. Although, certainly, the fact that we show an increasing ability to pay more fuels that spending by manufacturers so that they charge more, leading us to keep paying more.
As Wood sees it, some of this is the result of the cost of components and manufacturing. But at least in Apple’s case, he says, the pricey new models are the result of “a strategic decision to increase the price of the flagship iPhone to maximize the returns on a really amazing portfolio.”
Said another way, Carolina Milanesi, an analyst with Creative Strategies, said you can expect to see this trend of pricier models continue partly because brands know that customers especially treat their flagship products as “status symbols.”
We’ll have to wait and see how much of a hit our wallets are going to take once Apple unveils new iPhone details next month. But it, like Samsung and other device makers, has created a high-end phone segment that translates into a major source of revenue in part because consumers are keeping their phones longer.
Which is another reason manufacturers are increasingly pulling out all the stops to make sure it’s the flashiest and most expensive new model that catches your fancy and ends up being the one you hold on to. If it’s two years or more, so be it – as long as they make bank, of course.
