For Bill Wilson, it’s simple. He won’t pay $1,000 for a smartphone. Period.
“I’ll be hanging onto my iPhone 6 Plus until grim death,” says the radio production manager from Gainesville, Georgia. One grand “is just too much money for what you get.”
Wilson is in ample company. This week’s earnings reports for Apple and Samsung both showed a clear trend: consumer resistance to the ever-growing high prices of premium smartphones, reports USA Today.
The iPhone line now starts at $449, versus $350 in 2018, and topped at $1,100, while Samsung’s premium Galaxy phones are near the $1,000 mark as well. A new model, the Fold, will break all pricing records when it’s released in September at close to $2,000.
In quarterly earnings announced this week, Apple’s iPhone revenue declined 12% to $26 billion from $29 billion in the year-ago quarter, while Samsung blamed “weak sales momentum” for the Galaxy S10. Angelo Zino, an analyst with CFRA Research, says Apple iPhone sales will tumble 15% in the current fiscal year.
On Wednesday, Samsung is set to unveil its latest smartphone, a new edition of the Note, which currently sells for between $799 and $999.
So good luck with that, Samsung.
You are outta your damn mind if you’re going to get me to pay more than $300 dollars for a smartphone. Even at $300, I’ll just consider hanging onto whatever old device I have that still works. https://t.co/HtHIHbeaDP
— Cody (@socialcody) August 2, 2019
Apple got additional bad news this week when President Donald Trump announced new tariffs on China imports that would include the iPhone since it’s assembled in China with mostly Chinese parts. This would add $75 to $100 to the price of an iPhone, predicts Daniel Ives, an analyst with Wedbush Securities.
So why have premium smartphones stumbled? Consider a variety of factors:
—$1,000 is a massive stop sign.
—The new features introduced over the last few years haven’t been game-changing. Consumers really don’t care about facial recognition, augmented reality, faster processor enough to pony up the big bucks.
—The older phones work great and don’t fall apart. Sure, the batteries deteriorate, but you can get a new one for under $50 to $70. And if you crack a screen, which is likely, the cost is $150 to $200 for an older iPhone or Galaxy. So if you have, say, an older iPhone 7, and you replace those items, you’re looking at around $200 or so to upgrade. That’s a lot less than $1,000 for a new phone.
—We like the new and improved cameras, but for the majority of the world, selfies and food shots taken on an iPhone 6 won’t look that much different from those snapped on an iPhone XS. The software update tools Apple releases every year make the cameras and photo management in general better, and the update is free. Apple is expected to release the latest update, iOS 13, in September.
Adapted from USA Today
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