Flagship smartphone prices are out of control, and we wonder why the upgrade cycle for the average user is longer and longer. Back in the day — that we barely remember — it was normal to upgrade your smartphone every year. Especially if you extended or renewed your carrier contracts and got some incentives or subsidies.
Then Apple came along and killed that off (no, Samsung’s not innocent either), as the cycle slowly but surely got longer and longer. According to Strategy Analytics numbers for 2019, the said upgrade cycle is 33 months, and currently, it is just a tad beyond three years.
And it kind of makes sense. If you’re spending north of $1,000 on a smartphone, you’re going to hold on to it as long as you can (or as long as it serves its purpose, and the manufacturer doesn’t do something to slow it down or damage the battery to force you into an upgrade). Now that we’ve mentioned batteries, making them non-removable is just another way to force you into an upgrade once the battery degrades.
Speaking of the $1,000 threshold, Apple is to blame for that too. Why? Because they could pull it off. If consumers would have left those phones on shelves, Apple, or any other company for that matter, would have thought twice about crossing the barrier.
But today, we’re inching towards the $1,500 mark, and those phones, even at the outrageous and prohibitive smartphone prices, will sell, pushing the price tag higher and higher. Just the other day, OPPO announced the Find X3 Pro. £1,099 they charge for that thing, which is a hair over $1,500.
The niche products
It’s a stretch, but you could somehow justify the insane price tag for the niche products. These are foldables (Mate X2 goes as high as $2,959, Galaxy Z Fold 2 has a $1,999 price tag), these are the Porsche Designs, the Lamborghini, and McLaren editions, and the other exclusive products.
You see, these are not for everyone. The first category pushes the limits of technology, while the second category is pure branding mostly.
You don’t have to buy these products, but when it comes to regular smartphones, you will have to pay top dollar for a flagship.
The insanely priced flagship
Yes, we understand that these smartphones are more powerful than computers were just a couple of years ago. But those computers didn’t cost as much. Granted, everything smaller in technology is usually more expensive (if only smartphones remained decent-sized).
They say we make decisions emotionally and we rationalize them with logic. But logically thinking, is a $1,500 smartphone two times better than a still arguably expensive $750 phone? Of course not. Often times they’re not even that much better from generation to generation when the successor is more expensive than the predecessor.
There are two aspects to consider here: first, manufacturers throw in everything including the kitchen sink, with hardware components and features you’ll likely use once or twice and then forget about them. That increases the price. Second, the profit margins are huge. Just think about it: in 2018, every time you bought a $1,250 iPhone XS Max, you made Apple $800 richer. That’s because it cost Apple only $450 to manufacture it.
iPhone 12? Almost %70 profit margin. And, don’t think for a second, that Apple’s alone in this. They might be the company that makes the most profit off of smartphones, but they’re closely followed by the likes of Samsung, HUAWEI, and OPPO.
Why these insane smartphone prices?
Simply put, as I alluded at the beginning: because they can. Because they manage to generate demand, and, at the end of the day, because consumers are buying.
And, as outraging as it might be, it’s a vicious circle and a paradox. Back in the day, we were totally fine with buying a new $500 phone every year. That’s $1,500 over three years, and that’s exactly what we’re spending, give or take, every three years today. Pretty much levels out on a three-year span.
Did the smartphone prices go up because smartphone owners forced companies to increase them due to us extending the cycle? Or did manufacturers force us to extend the cycle because phones are becoming more expensive?
Let’s talk about it. What do you think about phone prices? Justified? Outrageous? Drop us a comment down below.
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