With Apple’s iPhone X priced $999 last year, it set a benchmark price for a flagship smartphone. When compared to other OEMs running Android have launched flagship phones with an even higher price tag, that steep tag was limited to a special exclusive version of the device with an absolute high amount of storage and some additional branding from a car or a luxury brand.
Analysts say that Apple had misjudged the market by pricing customers out of what was its highest-end and most revered iPhone. The starting price of $999 pushed out, as has continued ever since last September with commentators continuously claiming that the iPhone X was selling poorly. Yes, they were all wrong and Apple has confirmed that the iPhone X has outsold each and every other iPhone every month since its release.
With the iPhone X selling gangbusters at $999, it is not bad for a flop. It is perhaps no great surprise that the competition is also steadily increasing its prices. Samsung’s Galaxy S9 and Galaxy Note 8 also continues to rise with huge prices attached and even OnePlus, is also now selling devices at what was previously considered premium prices.
What is worrying is that this trend could continue with the 2018 iPhones, with the iPhone X Plus potentially costing no less than $1,200 according to some analysts.
In fact, with Apple launching three new iPhones, including a bigger 6.5-inch iPhone X Plus this year, except to shell out nearly $1,200 for the ‘best’ iPhone. People around the world will continue to buy these smartphones no matter the price, even after initially complaining about the hefty chunk of change that they have to hand over in order to get the latest and greatest smartphones.
According to the chief research analyst at CCS Insight, this is all because “consumers are well prepared to pay a premium for a mobile phone because it is arguably the most important product in their lives.”
Of course, there are multiple other reasons as to why smartphone prices are rising. Firstly, with smartphones getting more powerful with every passing iteration, the components used inside them are bound to get pretty expensive. Secondly, now that smartphone innovation is peaking, companies are having to spend more on R&D and this can lead if they earn enough profits to channel back into development.
However, the increase in smartphone prices is also allowing the likes of Samsung, Huawei, and Apple to create an ultra high-end smartphone segment. Where the sales margin will probably be low, but the profit margin will be extremely high. So, Huawei, this year became the world’s #2 largest smartphone maker and Apple became the first trillion dollar company.
The report did say that Apple’s manufacturing costs likely increase with the iPhone X thanks to the use of an OLED display and Face ID, but not to the extent that the $999 might lead us to believe. And smartphones also do a good job of bumping the ASP (Average Selling Price) up for OEMs which is always a good nice thing for them.