Samsung’s Galaxy S20 launched in South Korea recently, but early sales of the handset have been nowhere near what Samsung expected them to be. Coronavirus is one potential culprit, though the steep increase in smartphone prices could be another issue. The Galaxy S10 family was priced at $749, $899, and $999, while the 5G flavor cost $1,299. The Samsung Galaxy S20, on the other hand, is priced at $999, $1,199, and $1,399. That’s a 1.33x increase for the bottom-line device, 1.33x at the midrange, and 1.4x for the top-end SKU, if you don’t count the handful of people who might have bought the terrible 5G variant of last years’ phone.
In short, we’ve got a situation in which Samsung will undoubtedly blame coronavirus for its weak debut, probably because admitting people might not want to pay 1.33x more over the Galaxy S10 could make the product look bad. Samsung moved 70,800 units on launch day, compared with last year’s launch day volume of 140,000 units, and 220,000 launch day sales for the Galaxy Note 10, according to The Korea Herald. Telecom officials told that publication that the impact was caused by sharp declines in phone discounts and lower-than-expected subsidies towards new purchases, with coronavirus also listed as one contributing factor. Pricing on the devices in SK appears to be roughly similar to the US after accounting for inflation.
Are Modern Smartphones Overpriced Luxuries or Fairly Valued?
There are two schools of thought on whether these devices represent good values. My own opinion — which I’m disclosing right up front — is that they absolutely aren’t. The marginal improvements companies have introduced from generation to generation do not justify the dramatic increase in recent costs. Samsung and Apple have both radically jacked up prices from where they were just a few years ago, without delivering a single feature I’d actually consider worth paying for — which is why I haven’t. Modern smartphone companies want you plugged into their services, which is just another way of saying “We want to extract money from you on an ongoing basis so you find it more difficult to stop using our increasingly expensive products.”
I’m far from the only journalist to ask whether it’s worth it to pay $1,000+ or more for a device, but John Gruber over at Daring Fireball has a very different view. According to a post he published earlier this month:
Yes, phones that cost $1,000 or more are expensive. Yes, that’s outside the budget for most people. But why in the world would anyone argue this is ”hard to justify”? Phones are, for most people, the most-used computing device in their lives. They are also their primary — usually only — camera. A good camera alone used to cost $500-600.
There are way more people on the planet who’d rather have a $1,400 phone and a $400 laptop than the other way around. But you’ll never see a tech reviewer claim that $1,000-1,400 is “hard to justify” for a laptop. It’s ridiculously out of touch to argue otherwise. And, the fact that top-of-the-line phones have reached these price points does not negate the fact that truly excellent phones are available at much lower prices.
My response to this would be that while it’s true cheaper devices are also available, the price of those is also increasing, in many cases. When Apple launched the iPhone XR, it was lauded as the “budget” device of the new family. Given that it launched at $750, calling it a budget phone was absurd — but that’s what people did. (The actual “budget” device in the iPhone family is the iPhone 8, a 2.5-year-old device at $449.) Samsung does sell cheaper devices than the Galaxy family, but the entire point of increasing device price is that companies are trying to squeeze more revenue out of fewer smartphone sales.
Also, for the record — and as a tech reviewer — I’ll go ahead and say that I think paying $1,000 – $1,400 for a standard laptop is far too much money. One thousand dollars is a decent price for an affordable gaming laptop, and $1,400 isn’t too bad, either, but these are products designed for specific and more-expensive use-cases. Nobody who needs a basic machine for word processing and internet use should be stuck paying anything like $1,000. According to OEMs I’ve spoken to, the midrange market for smartphones barely exists in the United States. High-end devices are more popular here because of payment plans and the like. There’s nothing wrong with people choosing to buy whatever hardware they want, but that doesn’t mean they’re well-served by doing so, or that raising prices has no impact.
At the same time, the big difference between Samsung and Apple these days isn’t really in the objective experience of the hardware, but more in which software and ecosystem you want to be plugged into, as Ars Technica points out. On the one hand, this is potentially great, since many ecosystem capabilities are available whether you have an absolute top-end phone or a model from several generations back. However, this kind of explanation also cuts against the “It makes sense to buy a top-end phone” argument.
What bothers me the most over the argument of whether we should be paying more for phones, though, has nothing to do with whether you believe a $1,500 price is justifiable or how much you value the iOS / Android ecosystem. What bothers me is the idea we’ve all unconsciously accepted in phones — namely, that faster, better devices should always cost more year after year. The mantra of “faster, better, cheaper” drove the entire semiconductor industry and associated advances for decades. Median PC prices were celebrated as they fell from $2,000+ to $999 and below. The first computer I ever personally purchased was a $999 model, back when that price point was being regularly hit and celebrated with decent hardware for the first time.
I’m not claiming that relentlessly racing to the bottom didn’t have negative effects, because it absolutely did. By the time machine prices bottomed out, a lot of the median equipment was barely worth paying for given how cheaply it was built and how uninspired the design was. But there’s a middle ground between continually jacking up the price and cutting it to the point that the final device experience is subpar. It’s true that companies like Apple and Samsung have found ways to improve their hardware even as they’ve made it more expensive, but the price has increased significantly more than the features warrant, in my own opinion. Obviously people are welcome to buy any device they want for any reason they wish, but we’ve long since passed the price points where I’d personally consider upgrading to a new flagship device at launch.
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