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The New Price Ceiling of Premium Smartphones: Note8, iPhone 8, iPhone X

iPhone X

When it comes to consumer products, I have been agnostic about brands. Once a while, I might repurchase an existing brand because of convenience and familiarity, but given opportunities to experience other brands of better value and quality, I would switch.

It’s interesting that few years ago, the psychological price of a premium phone hovers around S$1100. Now with the launches of Samsung Galaxy Note8 and iPhone X, the price point goes even higher, yet consumers do not bat an eyelid to spend.

At the same time, another group of consumers would be seriously considering their options: would they continue to upgrade their current iPhones that are still working well? Or do they spend a fortune on a new iPhone?

Or perhaps, they ought to consider switching to an Android phone?

The retention of Apple’s market share depends strongly on consumer spending power and the need for brand association. Once consumers start to feel the pinch of spending, and once they feel that they have no desire to continue associating themselves with the brand, they will begin to consider alternatives.

Question: why would a consumer even decide to not associate themselves with a brand like iPhone? My thought is that smartphones are no longer a premium luxury compared to few years ago. Smartphones are a necessity, and even low-end phones can look and feel good. Obviously there will still be many who are brand and style conscious, but when iPhones become too expensive to be comfortably affordable, less people will be inclined to upgrade because they want to be seen with the latest iPhones, but only because they need to replace their aging devices and to continue function adequately with a mobile device.

Right now, the alternatives to iPhone appear too hard to resist. And I’m not talking about Samsung Galaxy devices, which have similar price points as iPhones. Because the price difference is relatively negligible yet the cost of switching (from iOS to Android OS) is quite huge, these iPhone users are not likely to switch to Samsung.

Samsung Galaxy S8, Sony Xperia XZs, Huawei P10 Plus

Rather, they might be eyeing on the mid-tier Android smartphones with respectable specs. Given numerous positive reviews on these capable mid-tier brands like OnePlus, Huawei, ASUS, OPPO, I reckon this is a good opportunity to attract users with aging iPhones.

Unfortunately for Android (and fortunately for Apple), users who switch from iPhone to budget Android devices will find themselves disliking Android, not because the OS is not intuitive, but because the hardware is not up to standard. Rational consumers will understand that these cheap devices are obviously incomparable to iPhones, but given this undesirable experience, they quite often jump back to iPhones, pay the premium price, and never look back. I can’t blame them, because Android smartphones are so unregulatedĀ that even Android users like myself get confused with the lack of functional consistency.

Additionally, these consumers might settle for the older generation iPhones, that technically still runs better than budget Android phones. Despite being an older model, these iPhones still look the part and visually indistinguishable when they wrap the phone with a fancy casing.

Apple’s iPhone price strategy appears to continue raising the bar to keep the brand positioning at a premium, nothing wrong with that. But it leaves a gap for other smartphone brands to grab.

Summary
Article Name
The New Price Ceiling of Premium Smartphones: Note8, iPhone 8, iPhone X
Description
Apple's iPhone price strategy appears to continue raising the bar to keep the brand positioning at a premium, nothing wrong with that. But it leaves a gap for other smartphone brands to grab.
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