Crazy Flagship Prices

Apple launched the iPhone X at a thousand bucks. The top end costs $1200. This was in 2017. In 2018, iPhone XS Max tops at a staggering $1449. Every other flagship device that launched since has tested the $1000 dollar mark. These are crazy prices. Really crazy. Pause for a moment… Are mobile devices, which inherently have a lifespan of 24-30 months worth $1000+ ?

The answer I predict will be revealed in 2019 refresh cycles. Thats when the first generation of these flagship typically come up for replacement. The flagships of today are without a doubt the most fantastic piece of devices. State-of-the-Art! But will people be tempted to upgrade these devices with every launch? I believe, that most people will hold on to these devices a while longer. This would mean lower sales of the flagship phones released post 2019. Apple, Samsung made their billions selling us millions of phones in the mid 2010s. To make these billions, the companies required that their products see mass adoption. Not be seen as exclusive devices, but be the daily drivers. That was exactly what these two companies managed to achieve. The flagships where priced such that people could afford them, most of the time subsidised by the carriers. I remember the first time I got my self a flagship. It was the Samsung S3. It was a perfect phone… fast, great camera… but for exactly 2 years. Then it started to slow. The battery began to die quickly. The next flagship I picked was the iPhone 6s. This was even better than the S3. It lasted for more than 2 years before the battery-gate kicked in. Luckily, I replaced the battery under the Apple Battery Replacement program. My current flagship is, well not exactly a ‘flagship’, but rather the ‘Flagship Killer’ OnePlus 6. Most of my phones are less than $650 thanks to buy-in / trade-in schemes. When I was looking to upgrade my iPhone 6s, the iPhone X was not even in the shortlist. It’s price even with the offers didn’t really justify. Plus, the user reviews of OnePlus 6 were great. Good build, good camera, fast OS, good battery with dash charge at less than half the price.

Today, the mobile market is a mature market. The differences between the high end phones has never been this close. So when experts rate a phone, there almost never is an unanimous winner anymore. And with phones that cost less than $500, replacing them in 2 years is always a possibility. Replacing a $1000+ phone in two years is also a possibility, but what will be interesting is the number of people who ACTUALLY go for replacement. The early reports suggest that the sales of iPhone XS are lower than expected. Samsung too is being given a tough fight by Huawei.

Another factor that will matter is that in the last 3-4 years none of the manufacturers have leap-frogged in terms of innovation. The hardware of this devices today are easily future proof for at least 2-3 years. Personally, I find their pursuit for the bezel less display laughable. I would instead prioritise a bigger battery or an indestructible display any day. Keep the bezels and put in as many sensors as possible if you ask me. Phones have moved on from being just a device for communication. They are a device that have an untapped potential as utility devices, health monitors, navigation devices, digital wallets.

Smartphones, especially the flagships, will need to realise, that $1000+ prices is not sustainable. They will still sell, but the sweet spot lies well below this price point. Apple just announced their quarterly results and the sales are way below. They sugar coated it by saying that the battery replacement program caused a hit. Also the phones of today are so good that people are happy to keep them for more than 2 years, which in plain english is saying that our new phones are just too expensive for people of upgrade, so they rather squeeze out every penny of the earlier $1000 device till they pick up the next $1000+ device. And god forbid if they get their hands on a device like OnePlus. Cause if they use if for a few days, they will realise what a daylight robbery the $1000+ devices are.

Manufacturers have to revisit the pricing of the earlier days when they were killing it in terms of sales. They have to cut down on their fancy bezel less, 4K targets. But rather put in better speakers, bigger batteries, unbreakable screens. If they don’t, then the next OnePlus like story is just waiting to happen.

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