Samsung took the wraps off of its new flagship Galaxy S20 lineup during Tuesday’s big Unpacked event, and people are still talking about the sleek new smartphones on Wednesday morning. The Galaxy S20, Galaxy S20+, and Galaxy S20 Ultra in particular are quite possibly the most impressive smartphones the world has seen at this point, so I’m sure people will still be talking about them in the days and weeks ahead. They’ll be talking about Samsung’s stunning Super AMOLED displays and the sleek Galaxy S20 design. They’ll be talking about monster specs, especially on the Galaxy S20 Ultra and its 16GB of RAM. They’ll be talking about Samsung’s new cameras, which sport a bunch of exciting new features like mind-bending 100x hybrid zoom on the Ultra model. And they’ll be talking about all of Samsung’s smart new software features, some of which quite innovative.
All that is well and good, but they’ll also be talking about what is arguably the most important tidbit regarding Samsung’s new Galaxy S20: the pricing. Samsung’s strategy with its flagship phones this year is positively baffling, to the point where some industry watchers I’ve spoken with don’t even know what to make of it. All signs are pointing to a huge opportunity in the smartphone market where mid-range pricing meets high-end pricing. Apple hit what appears to be the sweet spot with the iPhone XR in 2018 and the iPhone 11 last year, and Samsung followed Apple’s lead with the Galaxy S10e. This year, however, Samsung completely abandoned the $700-$800 price range with the Galaxy S20 series, and no one can seem to figure out why.
When Apple released the iPhone XR at a lower price point in 2018, it became the company’s top-selling iPhone model. Samsung followed suit in 2019 with the Galaxy S10e, and multiple independent reports have said it was the best-selling model in the S10 lineup. We’ve even heard that the S10e outsold the main S10 by a sizeable margin. Then later in the year, Apple released the iPhone 11 starting at $699, and it helped lead the company to a record-breaking holiday quarter.
All signs suggest that the new “entry-level flagship” segment is hugely important and very successful. So what does Samsung do? It abandons the space entirely with its new Galaxy S20 lineup.
Samsung’s base model Galaxy S20 starts at $899 for the 4G version and $999 for the model with 5G. Because Samsung followed Apple’s lead and moved a three-phone lineup for its Galaxy S series, the company’s entry-level S20 phone will inevitably be compared by smartphone shoppers to the iPhone 11. Apple’s iPhone 11, mind you, starts at just $699.
Gadget enthusiasts will be quick to point out that the Galaxy S20 shouldn’t be compared to the iPhone 11, but rather the iPhone 11 Pro instead — and they’re right. In terms of specs and features, that is indeed a much more fair comparison. But that’s not the comparison most shoppers will make. They’ll see that the cheapest new iPhone starts at $699 and the cheapest new Galaxy S20 starts at $999 in the US, where it looks like the major carriers are all opting for the 5G version. That’s a massive price gap, and it’s going to be a tough sell for many people. Sure the Galaxy S20 has a better camera, 5G, and plenty of other benefits over the iPhone 11. But when faced with the option to pay a whole lot more upfront or each month, many people are going to opt for the cheaper phone.
Samsung will continue selling last year’s Galaxy S10 models at a discount, with the Galaxy S10e now starting at $599. That could certainly help, but there are still some problems with perception. The Galaxy S20 will have prominent placement at wireless carrier stores and sales reps will be incentivized to push them hard. The Galaxy S10 will clearly be “last year’s model with last year’s features,” while the iPhone 11 is Apple’s newest and best smartphone series. Perhaps that played a role in Samsung’s decision to skip the “Galaxy S11” name and jump all the way to S20.
I do have some sources at Samsung, but I don’t have any insight into Samsung Mobile’s sales mix or its margins. Perhaps it’s not worthwhile for the company to sell smartphones with cutting-edge specs in the $699-$799 price range. That notion seems a bit odd since many of the Galaxy S20’s most expensive components are supplied by other divisions at Samsung, so one would think the company could achieve margins that are at least in the same ballpark as what Apple manages with the iPhone 11. But it seems like Samsung could have dialed back the specs a bit and continued to compete in that “entry-level flagship” space where it has previously had plenty of success with the Galaxy S10e.
Consumers in the market for a high-end phablet will have a terrific option in the Galaxy S20 Ultra. It absolutely obliterates the iPhone 11 Pro Max on paper in practically every area (other than performance, where nothing can touch Apple’s A13 chipset). The decision between the Galaxy S20 or Galaxy S20+ and the iPhone 11 Pro will also be a difficult one. But Samsung no longer offers a new smartphone that can compete with the iPhone 11. For a company with smartphone earnings that have been in steady decline for quite some time now, it’s a perplexing move, to say the least.