This year and last, Samsung, Apple, and, recently, Google set the bar higher for smartphones pushing their price bar higher than ever before. It was somewhat necessary to recoup the costs of R&D, production, marketing, and the like. It also helped inflate the smartphones’ status as premium products to die for. It appears that they may be digging their own graves in the long run.
High-end components, of course, are more expensive than more common ones, but the rate of price increase doesn’t seem proportional to the build costs. The gap seems to grow even more for each new generation of smartphones.
Business considerations aside, this rise in prices has a double-edged effect on consumers. On the one hand, they paint the picture of a product that only a few can afford, which has the ironic effect of making it even more desirable. Apple has been doing it for years.
On the other hand, it is actually and factually something very few people can afford. That ultimately meant that fewer people actually bought the new phones, which may have contributed to last month’s decline in smartphone shipments last quarter, when the most expensive non-luxury phones shipped for the first time.
The lower sales numbers become an even bigger problem in the context of the current practice of releasing flagship smartphones every year. Some, like Samsung, even release twice a year. Others release multiple ones at the same time or spread them over the months. Long story short, there are dozens of new phones every year.
The smartphone market is changing and so is user habits. Smartphone vendors aren’t, although some, like LG and HTC, may have noticed, even though they already had lower prices. Samsung may have seen clues, but it isn’t one to change directions so quickly. Apple is one that’s unlikely to change at all. High-end smartphones are becoming luxury items that very few can afford. And whatever few can afford, very few will buy. And that may spell trouble for the companies that rely on them to survive.