Why your iPhone and Android phone will get more expensive

Why your iPhone and Android phone will get more expensive

Remember when the only phones with over-$1,000 price tags were made of leather, ruby and sapphire crystal? Thanks to Apple and Samsung, those days are over. The iPhone XS and Galaxy Note 9‘s $999 starting price tags cement the thousand-dollar phone as the new normal. Level up your storage capacity and the prices only climb. If you want that iPhone XS with 512GB storage capacity, you’ll pay $1,349 — that’s 35 percent more. In the UK that high-spec phone is a whopping £1,349 and AU$2,199 in Australia, and let’s not even get started with the even more expensive iPhone XS Max.

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But the problem doesn’t end there. This new wave of higher prices for top-tier devices is part of a larger trend that affects the prices of most phone brands, including Google, Huawei and OnePlus.

Premium models aren’t the only products getting more expensive; midtier devices are nudged up, too. The iPhone XR costs 7 percent more than last year’s entry-level iPhone 8, and 15 percent more than the iPhone 7. The OnePlus 6T, meanwhile, rose 3.8 percent over the OnePlus 6 phone released just six months ago, and a total of 37.6 percent over the last two years.

The data from 11 phone models from 2016 to 2018 shows a pattern of sharp price hikes that we expect to see heighten in 2019 and beyond (See your regional chart below). Apple has certainly applied the model to other electronics in its lineup, boosting its prices on its new iPad Pro and MacBook Air over previous models, and creating wide price swings between the entry-level product and the higher storage version.

These creeping prices across Apple’s portfolio and the mobile category signal that costlier devices are here to stay — and it may be our fault by buying them in droves in the first place.

When Apple broke the $1,000 barrier for its iPhone X in 2017, critics scoffed at its exorbitant price, but it quickly outsold every other Apple device in each week since it first went on sale Nov. 3, 2017. Apple’s gambit paid off as consumers accepted the higher-price models, and other manufacturers followed Apple’s lead.

The trend of increasingly costly handsets in the top tier underscores the cell phone’s importance as an everything-device for communication, work, photography and entertainment. And as processing power, camera technology, battery life and internet data speeds improve generation after generation, the value people attach to a phone is sure to swell.

“Consumers are prepared to pay a premium for a mobile phone because it is arguably the most important product in their lives,” said Ben Wood, the chief research analyst at CCS Insight.

Rising prices aren’t unusual on their own. Faster, better components like processors and cameras cost more to make. The financial load of researching and developing new materials also gets folded into the final product. And inflation affects the cost of goods outside of tech, too.

But R&D spending and inflation don’t tell the entire story your phone’s creeping expense. By increasing the prices of their phones with each iteration, Apple, Samsung and other leaders in the industry are creating an ultra high-end segment that can make each sale more profitable — that’s important as people start holding on to their phones longer, for three years or more.

Yep, your phone costs more every year

With few exceptions, phone prices from top brands are on the rise.

“Although overall smartphone shipments will decline slightly in 2018, the average selling price (ASP) of a smartphone will reach $345, up 10.3 percent from the $313 ASP in 2017,” IDC analyst Anthony Scarsella said in IDC’s Worldwide Quarterly Mobile Phone Tracker, shared with journalists in May. Prices will jump on the high end especially, Scarsella added.

The uptick is immediately noticeable when comparing phone prices from today with the same model released just two years ago.

Apple’s prices have risen at a steady rate for both its iPhone and iPhone Plus/Max lines, making the iPhone XS Max a luxury spinoff.

Samsung’s Galaxy S, S Plus and Note prices are swinging upward too. Even before the Galaxy Note 9’s $1,000 bombshell, the S9 Plus — last year’s iPhone Plus and iPhone X rival — was already inching toward iPhone X prices.

US PHONE PRICES FROM 2016-2018

2016 (starting price) 2017 (starting price) 2018 (starting price) % change of highest price from 2016 to current model
iPhone (cheapest) iPhone 7: $649 iPhone 8: $699 iPhone XR: $749 15.4%
iPhone X N/A iPhone X: $999 iPhone XS: $999 0%
iPhone Plus/Max iPhone 7 Plus: $769 iPhone 8 Plus: $799 iPhone XS Max: $1,099 42.9%
Samsung Galaxy Galaxy S7: $650-695 Galaxy S8: $720-$750 Galaxy S9: $720-$800 15.1%
Samsung Galaxy Plus S7 Edge: $750-795 Galaxy S8 Plus: $785-$850 Galaxy S9 Plus: $840-$930 17%
Samsung Galaxy Note Note 7: $834-880 Note 8: $930-960 Note 9: $1,000 13.6%
OnePlus OnePlus 3: $399 OnePlus 5: $479 / OnePlus 5T: $499 OnePlus 6: $529 / OnePlus 6T: $549 37.6%
LG G series LG G5: $576-689 LG G6: $600-720 LG G7: $750-790 14.7%
LG V series LG V20: $672-829 LG V30: $800-912 LG V40: $900-$980 18.2%
Google Pixel Pixel: $649 Pixel 2: $649 Pixel 3: $799 23.10%
Google Pixel Plus Pixel XL: $769 Pixel 2 XL: $849 Pixel 3 XL: $899 16.9%

UK PHONE PRICES FROM 2016-2018

2016 (starting price) 2017 (starting price) 2018 (starting price) % change from 2016 to current model
iPhone iPhone 7: £599 iPhone 8: £699 iPhone XR: £749 25%
iPhone X N/A iPhone X: £999 iPhone XS: £999 0%
iPhone Plus iPhone 7 Plus: £719 iPhone 8 Plus: £799 iPhone XS Max: £1,099 52.9%
Samsung Galaxy Galaxy S7: £569 Galaxy S8: £689 Galaxy S9: £739 29.9%
Samsung Galaxy Plus S7 Edge: £639 Galaxy S8 Plus: £779 Galaxy S9 Plus: £869 36%
Samsung Galaxy Note Note 7: £700 Note 8: £869 Note 9: £899 28%
Google Pixel Pixel: £599 Pixel 2: £629 Pixel 3: £739 23.4%
Google Pixel XL Pixel XL: £719 Pixel 2 XL: £799 Pixel 3 XL: £869 20.9%
LG G series LG G5: £539 LG G6: £649 LG G7: £599 11.1%
LG V series N/A LG V30: £800 LG V40 ThinQ: N/A
OnePlus OnePlus 3: £329 OnePlus 5: £449 OnePlus 6: £469 / OnePlus 6T: £499 51.7%

We see the most shocking escalation from OnePlus, whose price jumps up each time a new model arrives. OnePlus is currently on track for two variations per year: The OnePlus 6 debuted in June for $529 and the OnePlus 6T launched in October for $549. Again, the OnePlus 6T costs 37.6 percent more than the 2016 model in the US. The phone became 51.7 percent more expensive in the past two years if you paid in British pounds.

“As reliance on smartphones has increased drastically over a short amount of time, the increase in quality and components across the industry required to meet high performance demands has also risen,” a OnePlus representative said.

According to LG, “Key factors include the cost of components, competitor pricing, carrier incentives, tariffs, etc.,” Ken Hong, LG’s senior director of global communications, said in an email.

“Fact is, these input costs are rising so we’re forced to follow suit,” Hong said, adding that introducing more variants like the LG V35 has the positive effect of lowering the price of the previous model, in this case the LG V30.

CNET reached out to all manufacturers mentioned in this story for comment.

Interestingly, the Pixel 2 and Pixel 2 XL cost the same as the Pixel and Pixel XL. However, Google raised the Pixel 3 price 23 percent, without adding a second camera on the back and making minimal design changes. Google has pushed up the price to match the competition.

But making phones is more expensive now, right?

Phones, like all electronics, are composed of parts sourced from various suppliers, and if the cost of those parts goes up, it’s a sure bet the cost of the phones will, too……Read more>>

Source:- cnet

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