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We are the ones making the iPhone and Pixel more expensive

We are the ones making the iPhone and Pixel more expensive


Differentiation now costs more, so phones cost more

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Photo by Dieter Bohn / The Verge
Photo by Dieter Bohn / The Verge

This year has seen a big upgrade in quality from most phone companies: Samsung’s new Galaxy Note doesn’t explode, Apple’s iPhone has a radical redesign, the OnePlus 5 is lovely, and LG’s V30 is shaping up to be a strong contender. If you love technology, you love it for precisely this inexorable march toward better, faster, and prettier devices. But one thing that’s different about the best smartphones of 2017 is that the price of admission is going up.

  • The Huawei P9 cost £449 in the UK in 2016, but this year’s P10 starts at £569. You get more, but you pay more as well. (+26%)
  • The OnePlus 3 was $399 in 2016, but the 2017 OnePlus 5’s starting price is $479. (+20%)
  • The Galaxy Note 7 was $849 in 2016, but now the Galaxy Note 8 costs $930 at a minimum. (+10%)
  • The iPhone 7 Plus of 2016 ranged in price from $769 to $969, and Apple has topped it this year with the $999 iPhone X. (+30% starting price)
  • The Google Pixel XL of 2016 was $769 or $869, depending on storage, and this week’s leaks suggest that the 2017 edition will be dearer with $849 and $949 price points. (+10%)

With taxes factored in, we can say with surety that the $1,000 smartphone is among us — and it’s not going away anytime soon, either. That’s the reality of advanced mobile technology now. Even incremental change has become slow and expensive, so if we all continue to insist on seeing improvements on a yearly cadence, we should accept that some of the increased cost will trickle down to us. There’s no industry-wide conspiracy to hike up prices without justification, even though they are definitely moving up in a harmonized, seemingly coordinated fashion. We’re just looking at a very mature market, one where the major contenders are rolling out their eighth generation of devices.

The price pressure is coming from the top, and it’s driven by the pursuit of unique displays

Apple, Samsung, and Google will each be offering you a variety of ways to spend four figures on your next phone. I’ve already written at length about why Samsung thinks it can get away with the escalation in price. The three key factors are that (a) it’s not a huge rise from last year’s Note model, (b) it’s padded out with immediate bundles and sweeteners that get you extras like a DeX desktop dock, and (c) Apple’s making the same move, which normalizes it. For Apple, the iPhone X’s OLED screen from Samsung is surely a pricey component, especially when you consider Samsung’s likely reluctance to share an exclusive piece of hardware (no one else does bezel-less OLED of this quality, not even LG) with its biggest mobile rival. And as to Google and its new Pixel XL? I’m not going to prejudge that product, though it too is expected to have a hard-to-manufacture OLED display with reduced bezels.

Photo by Sam Byford / The Verge

The unifying threads between the three companies pushing past the $1,000 marker are the desire to have an unmatched display (however briefly) and the depth of brand goodwill to convince consumers to come along for the ride. The loyalty of iPhone users is legendary, rivaled only by the degree of dependence that most of the world has on Google apps and services. And with Samsung having sold a few hundred million smartphones of its own, many people have grown attached to that brand too. To push people to spend more than they’ve previously been comfortable with, a strong brand is essential.

As to the other two competitors I’ve mentioned here, Huawei and OnePlus, their price hikes were small outrages at the time when they happened, but they fit much more logically into the grand scheme of things today. The overriding fact of the smartphone market is that most people want a device that looks like an iPhone plus Instagram photos that look like they were shot on an iPhone. Huawei and OnePlus know their role is to deliver that sort of pseudo-iPhone experience at a certain fraction of the full iPhone price, and they’re just keeping pace. Both the Huawei P10 and OnePlus 5 have an unmistakeable iPhone feel to their designs, both have dual cameras like the premium iPhone, and the OnePlus system is basically a like-for-like ripoff. If you want to think of this as the Apple and Samsung devices dragging everyone else up higher into the pricing stratosphere — including Essential, HTC, and even BlackBerry — that wouldn’t be inaccurate.

Making smartphones better than they are now is going to be expensive

In past times, display and design upgrades were almost free. One year you had a 4.3-inch IPS LCD as the standard-setting screen, the next year it was 4.7 inches, then 5, then 5.5 inches, and then... well, that’s where we are now, at the end of the obvious upgrade path and the beginning of differentiation through new display technology and manufacturing methods. We used to see phones leap from 14mm in thickness down to 12mm and 10mm and eventually to sub-7mm designs. But now everyone has access to large screens, everyone can fit a full smartphone inside a slender metal shell, and so the innovative edge necessarily has to shift.

iPhone X
Photo by Dieter Bohn / The Verge

As consumers, we still have a wide breadth of options that can keep us satisfied without being at the absolute pinnacle of new technology. The Moto Z2 Play, the iPhone SE, the Honor 9, and a smattering of well designed ZTE phones can fulfill most people’s mobile needs (it’s not like Snapchat demands an especially awesome camera, right?) while costing a third of the price of an iPhone X. But the premium market is definitely drifting up, and we’re going to see more stratification than we used to have, even while things like dual-camera systems become table stakes for most devices. It’s going to be an uneven path forward, though the likelihood is high that we will continue to enthusiastically support phone makers as they make that shift.

The Galaxy Note 8 is Samsung’s most expensive phone ever, and it comes on the heels of the disastrous Note 7, but it still broke presale records. The iPhone X is certainly Apple’s most expensive iPhone ever, but is there any doubt that every available unit produced this year will be sold as soon as it becomes available? And as to Google’s Pixel XL, we all thought it was expensive last year and yet it too has been incredibly hard to get ahold of in 2017. I’m going to predict that Google will still have struggles to sate an even higher demand for its new Pixel generation this year, higher prices be damned. Smartphones are simply that important to us now, that indispensable. Most people use them as much for business as they do for leisure, and a work computer that fits into your pocket is not the most irrational way to spend $1,000.

I’m a fan of consumer technology in large part because the greatest and latest thing usually goes from premium to mainstream in the blink of an eye. It erodes elitism. But what’s happening with smartphones in 2017 is that blink is growing longer. We’re still going to see awesome new things like bezel-less OLED screens and the Android response to Face ID making their debut on affordable devices, but that’s just going to take longer than before.