Differentiation now costs more, so phones cost more
This year has seen a big upgrade in quality from most phone companies: Samsung’s new Galaxy Note doesn’t explode, Apple’s iPhone has a radical redesign, the OnePlus 5 is lovely, and LG’s V30 is shaping up to be a strong contender. If you love technology, you love it for precisely this inexorable march toward better, faster, and prettier devices. But one thing that’s different about the best smartphones of 2017 is that the price of admission is going up.
The Huawei P9 cost £449 in the UK in 2016, but this year’s P10 starts at £569. You get more, but you pay more as well. (+26%)
The OnePlus 3 was $399 in 2016, but the 2017 OnePlus 5’s starting price is $479. (+20%)
The Galaxy Note 7 was $849 in 2016, but now the Galaxy Note 8 costs $930 at a minimum. (+10%)
The iPhone 7 Plus of 2016 ranged in price from $769 to $969, and Apple has topped it this year with the $999 iPhone X. (+30% starting price)
The Google Pixel XL of 2016 was $769 or $869, depending on storage, and this week’s leaks suggest that the 2017 edition will be dearer with $849 and $949 price points. (+10%)
With taxes factored in, we can say with surety that the $1,000 smartphone is among us — and it’s not going away anytime soon, either. That’s the reality of advanced mobile technology now. Even incremental change has become slow and expensive, so if we all continue to insist on seeing improvements on a yearly cadence, we should accept that some of the increased cost will trickle down to us. There’s no industry-wide conspiracy to hike up prices without justification, even though they are definitely moving up in a harmonized, seemingly coordinated fashion. We’re just looking at a very mature market, one where the major contenders are rolling out their eighth generation of devices.
The OnePlus 3 was $399 in 2016, but the 2017 OnePlus 5’s starting price is $479. (+20%)
The Galaxy Note 7 was $849 in 2016, but now the Galaxy Note 8 costs $930 at a minimum. (+10%)
The iPhone 7 Plus of 2016 ranged in price from $769 to $969, and Apple has topped it this year with the $999 iPhone X. (+30% starting price)
The Google Pixel XL of 2016 was $769 or $869, depending on storage, and this week’s leaks suggest that the 2017 edition will be dearer with $849 and $949 price points. (+10%)
With taxes factored in, we can say with surety that the $1,000 smartphone is among us — and it’s not going away anytime soon, either. That’s the reality of advanced mobile technology now. Even incremental change has become slow and expensive, so if we all continue to insist on seeing improvements on a yearly cadence, we should accept that some of the increased cost will trickle down to us. There’s no industry-wide conspiracy to hike up prices without justification, even though they are definitely moving up in a harmonized, seemingly coordinated fashion. We’re just looking at a very mature market, one where the major contenders are rolling out their eighth generation of devices.
THE PRICE PRESSURE IS COMING FROM THE TOP, AND IT’S DRIVEN BY THE PURSUIT OF UNIQUE DISPLAYS
Apple, Samsung, and Google will each be offering you a variety of ways to spend four figures on your next phone. I’ve already written at length about why Samsung thinks it can get away with the escalation in price. The three key factors are that (a) it’s not a huge rise from last year’s Note model, (b) it’s padded out with immediate bundles and sweeteners that get you extras like a DeX desktop dock, and (c) Apple’s making the same move, which normalizes it. For Apple, the iPhone X’s OLED screen from Samsung is surely a pricey component, especially when you consider Samsung’s likely reluctance to share an exclusive piece of hardware (no one else does bezel-less OLED of this quality, not even LG) with its biggest mobile rival. And as to Google and its new Pixel XL? I’m not going to prejudge that product, though it too is expected to have a hard-to-manufacture OLED display with reduced bezels.
Apple, Samsung, and Google will each be offering you a variety of ways to spend four figures on your next phone. I’ve already written at length about why Samsung thinks it can get away with the escalation in price. The three key factors are that (a) it’s not a huge rise from last year’s Note model, (b) it’s padded out with immediate bundles and sweeteners that get you extras like a DeX desktop dock, and (c) Apple’s making the same move, which normalizes it. For Apple, the iPhone X’s OLED screen from Samsung is surely a pricey component, especially when you consider Samsung’s likely reluctance to share an exclusive piece of hardware (no one else does bezel-less OLED of this quality, not even LG) with its biggest mobile rival. And as to Google and its new Pixel XL? I’m not going to prejudge that product, though it too is expected to have a hard-to-manufacture OLED display with reduced bezels.
The unifying threads between the three companies pushing past the $1,000 marker are the desire to have an unmatched display (however briefly) and the depth of brand goodwill to convince consumers to come along for the ride. The loyalty of iPhone users is legendary, rivaled only by the degree of dependence that most of the world has on Google apps and services. And with Samsung having sold a few hundred million smartphones of its own, many people have grown attached to that brand too. To push people to spend more than they’ve previously been comfortable with, a strong brand is essential.
