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Why does Samsung think you’d be willing to spend nearly $1,000 on a Galaxy Note 8?

Why does Samsung think you’d be willing to spend nearly $1,000 on a Galaxy Note 8?

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Samsung Galaxy Note 8
Samsung Galaxy Note 8
Photo by Sam Byford / The Verge

I’ve been looking at the $930 starting price for the new Samsung Galaxy Note 8, scratching my head in bewilderment, looking at that price again, and furrowing my brows. We don’t usually get many mainstream phones with a starting price north of $900 ($960 if you opt for Verizon or AT&T, and even worse in the UK thanks to the pound’s Brexit-induced weakness), and I find myself wondering about the market dynamics nudging the flagship price tiers up. Is it a matter of market saturation encouraging phone vendors to move up into higher price brackets so as to make more per unit sold? Was there always an audience for $1,000 phones, which Samsung is only now deciding to explore / exploit directly with the Note 8?

Having consulted with the Verge hive mind, here are my best hypotheses about the reasoning behind Samsung’s latest move up in price with its brand new phone.

  • The first thing to note is that Samsung hasn’t suddenly leapt from $700 to beyond $900. Last year’s ill-fated Galaxy Note 7 also started above $800, as did this year’s Galaxy S8 Plus. These prices are substantially higher than what we might have previously been used to, and they’re way above the cost of some supremely decent smartphones like the Moto Z2 Play, but recent history has demonstrated that there is a clientele even at those higher price points. Samsung’s success selling the Galaxy S8 and S8 Plus has been testament to that.
  • On a related note, Samsung hasn’t actually been selling the S8 and its larger sibling at their full price all that often. A constant flow of deals and discounts around the flagship Samsung smartphone has meant that US customers have been able to get it for as much as $200 off the headline price relatively often. The same might end up being true with the Galaxy Note 8, which is being offered with preorder sweeteners from Samsung, Sprint, and various retailers. Trade-in deals will also play a big part in enticing Note customers. So part of the answer might simply be that you’ll never have to actually pay that shockingly high price.
  • A more substantial, and less benign, element to the carrier involvement in pricing the Note 8 is that every US carrier is chopping and changing the pricing to suit its internal contractual deals and pricing policies. The difference between an $800 phone and a $930 one is more easily palatable when it’s segmented into 24 monthly payments of less than 10 bucks. Most carriers already serve up an impenetrable web of charges, costs, terms, and conditions, so as a user, if you only see your bottom line increasing slightly, you’re fine. I’m not saying this is a wise approach, but it does seem likely to have contributed to the trend toward pricier phones.
  • The S Pen stylus is actually a difference maker. I was one of those guilty of initially underestimating the appeal of the S Pen, labeling the original Galaxy Note “a bad idea executed very well.” But time has shown that device was a pioneer both in pushing large-screen phones into the mass market and in becoming a go-to note-taking computer for many people. The Note 8’s display isn’t much larger than that of the S8 Plus, and its dual-camera system will have to prove its value over time, but Samsung’s real reason for persisting with the Note series is the thing inherent in its name: the ability to take notes quickly and naturally. Most people who’ve used Samsung’s S Pen to take notes without even turning the phone’s screen on have loved the experience. Samsung clearly believes in its stylus as a unique selling point.
  • As phones are nudging up into pricing previously reserved for laptops and desktop PCs, they’re bringing matching capabilities, such as Samsung’s DeX docking station. At its debut today, the Galaxy Note 8 was used to conduct a Zoom conference call, which was seamlessly picked up on a desktop with a DeX stand on it, where the user shared his screen with the other person and did some basic photo editing. The idea of the phone truly and entirely replacing my laptop still feels fanciful to me, but I can see that being a growing possibility for others. Let’s not forget that Microsoft’s Windows will be made to run on ARM chips (again) at the end of this year on a Qualcomm-powered laptop, using the same Snapdragon hardware as you’ll find inside the Note 8.
  • As high as the Note 8’s cost may be, Samsung could still be pricing it as fairly and keenly as any of its previous devices. We often take it for granted that tech companies will give us a ton more features, specs, and capabilities for the same price we paid the previous year — but consider that the high-resolution, bezel-deprived OLED screen that Samsung has inside the Note 8 is a major innovation that no one else has yet matched (though LG and Apple are expected to have the same in their September phone launches). Samsung has also put optical image stabilization inside both of its rear-facing cameras, which is no small feat. There’s plenty of advanced engineering embodied in this new device, and it may simply be the case that we’re paying more to get more. The definition of premium.
  • Comparing the Galaxy Note 8 against other Android smartphones simply on a spec basis makes Samsung’s new phone look like poor value for money. But that ignores brand loyalty, which Samsung enjoys more of than any other Android vendor, and it also disregards the often crucial timing of when a phone is released. Launching it in September, Samsung is springing the Galaxy Note 8 right in the middle of the autumn upgrade season, the time when all the people who bought iPhones and Galaxys in September two years ago are primed to make their next decision. It’s unlikely that any other Android phone maker could get away with a $900 price for its flagship device, but Samsung is about as established in people’s minds and tech shopping habits as Apple’s iPhone is.

Rumors are swirling of an iPhone that could scale far beyond the $1,000 mark, but I’m still trying to adapt to a world where four figures are not an eyebrow-raising sum of money to pay for a smartphone. Personally, I struggle to keep a phone’s screen free of scratches for even a month, and I’m not comfortable investing that much money into a device as fragile as modern phones are. And damn if phones don’t get obviated so much faster than any other tech I could buy for $900 or $1,000.

My qualms are evidently not shared universally, however, as the top price for phones, whether iOS or Android, has been on a steady climb for many months now. In fact, this September is shaping up to be the most expensive Samsung vs. Apple face-off since their infamous patent litigation battle.