Samsung Electronics and Huawei Technologies watched as Apple first priced a mass market smartphone at more than US$1 000 — and now have upped the ante with new models at almost double that cost.
Apple kicked off the trend in 2017 with the iPhone X. Its latest premium iPhones, the Xs and Xs Max, cost as much as $1 450. This past week, Samsung and Huawei doubled the bet, pricing their folding phones at $1 980 and about $2 600, respectively. That makes the folding devices the most expensive phones to date, excluding low-volume, jewellery-like phones from companies like Vertu that can top $10 000.
Apple’s rivals have co-opted the company’s strategy of trying to squeeze more cash out of stagnating unit sales, pushing the price of some phones well above what many people would pay for a laptop computer. The move seems to have hurt Apple, which reported that iPhone revenue declined 15% in the fiscal first quarter from a year earlier.
Samsung and Huawei’s demand for larger chunks of consumer cash will hinge on whether the folding-screen phenomenon is the next new wave in smartphones or a passing fad.
“It won’t be a big volume mover at that price, but keep in mind that notebook PCs used to cost $2 000, too, before they reached more affordable price points,” Bryan Ma, vice president of devices research at IDC, said of Samsung’s Galaxy Fold phone. Richard Yu, CEO of Huawei’s consumer group, called his Mate X “very expensive”.
Samsung also has increased the price of its new flagship S10 line. The S10+ costs from $1 000 to $1 600, while an upcoming 5G version is likely to be priced at the high-end of that range.
Average selling price
Excluding the foldable devices, the average selling price of smartphones increased to $575 in the fourth quarter of 2018 from $542 a year earlier, according to IDC.
Apple’s pricing strategy initially seemed to pay off. After launching the X, the company reported record iPhone sales in the fiscal first quarter of 2018. But sales stalled during the year, especially in China where competitors introduced phones with similar technology at sometimes a third or half the price.
The sluggish sales spurred a “fire drill” at Apple, with the iPhone maker introducing a variety of promotions to offset the high prices.
Chief operating officer Jeff Williams said Apple is “very aware” of concern over its product pricing. “We do not want to be an elitist company,” Williams said earlier this month in an appearance at Elon University, according to the Times News in Burlington, North Carolina. “We want to be an egalitarian company, and we’ve got a lot of work going on in developing markets.” — Reported by Mark Gurman and Jacqueline Gu, with assistance from Ian King, (c) 2019 Bloomberg LP
