Have smartphone prices hit the ceiling?

Have smartphone prices hit the ceiling?

While many of us would be lost without our smartphones, the last two years have seen a steady drop in the number of phones sold.

This is largely due to market saturation. Sales are slow in Europe and North America, though developing markets show more promise for the likes of Samsung, Apple and Sony.

When the western markets were livelier, smartphone manufacturers drove up profits by making smartphone prices as high as they could.

The first iPhones sold for £269 in 2007, but when the iPhone X launched a decade later, it cost around £1,000.

And do you remember when fanboys (and girls) would sleep outside Apple stores to be first in the queue for a new model?

That rarely happens any more.

After years of being able to sell the latest smartphone simply because it was the latest smartphone, manufacturers are struggling to convince buyers their new gadget is worth a premium price.

In fact, they seem to be struggling to persuade buyers to purchase a new phone at all…

Not so smart anymore

When the iPhone X came out, other manufacturers followed Apple’s pricing strategy.

Suddenly, the idea of paying £1,000 for a premium smartphone no longer seemed crazy.

Having kept steady or dropped slightly between 2012 and 2016, average smartphone prices began to rise again in 2017.

But technology and must-have innovations didn’t keep pace. And by 2017, most people who wanted a smartphone already had one.

Manufacturers had to work harder to shift units. And in the absence of game-changing phone tech, customers seemed content to keep their devices for longer.

Market structure played a role, too.

Until recently, many people bought their smartphone along with a contract and SIM.
This softened the blow of high prices by dividing the cost into easier monthly payments.

But with the advent of the tempting SIM-only deals right here on our site, many of us now look to buy phones outright.

That makes high purchase prices an immediate barrier.

What’s the future for smartphone prices?

Looking ahead, handset prices could depend on several factors, including technical innovation.

Will there be enough new gadgetry and capability in new smartphones to convince buyers to pay more than £1,000? Or does the £1,000 mark represent a psychological tipping point?

Another issue lies in the expanding mid-price category.

Mid-price manufacturers are often admitting defeat on aesthetics and build quality, but competing with (and even beating) their higher-priced peers on capability and innovation.

Then there is the question of whether smartphones will continue to exist at all in their current form.

Trends like foldable phones, ever-increasing screen sizes and greater pressure to both work and play on the move seem to be driving a trend towards phablets.

In the UK, the number of voice calls we make is fast declining, which could also help to fuel change.

In other words, we may soon be hard-pressed to tell the difference between our phone and our tablet because all digital technology is becoming mobile.

Against this background, it makes sense to imagine a single device which is big enough and yet compact enough to cope with all of these demands.

If this is where smartphones are going, the costs and timelines involved can only be guessed at.

But while these factors may seem to paint a complex picture, the take-home message is simple.

When the time is right, buy your smartphone – and your SIM-only deal – thoughtfully and carefully.

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