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Why your iPhone, Android phone will cost more in 2019

Why your iPhone, Android phone will cost more in 2019
Source: CNET
Date: 03-01-2019 Time: 08:01:27:am

If you thought $1,000 was outrageous for an iPhone or Android device, you're in for a nasty surprise in 2019. Thanks to Apple and Samsung phones like the iPhone XS and Galaxy Note 9, $999 is the new normal. And that's only the starting price.

Level up your storage and phones become more costly still. For example, if you want an iPhone XS with 512GB storage capacity, you'll pay 35 percent more ($1,349). Let's not even get started with the iPhone XS Max.

While there are certain conditions nudging prices higher, some massive changes will build on these still-rising costs, making certain phones in 2019 even more expensive. 5G phones and foldable designs seen in the upcoming "Galaxy X" will be cutting-edge, but they won't be cheap.

This new wave of higher prices for top-tier devices is part of a larger trend that affects the prices of most phone brands, including Google, Huawei and OnePlus.

As phone makers struggle against costlier components like more powerful chipsets and custom cameras, they're also anticipating new designs, like 5G and foldable designs, that are crucial to helping their brands stand out in a cutthroat -- but lucrative -- industry.

Premium models aren't the only products getting more expensive. Midtier devices are being nudged up, too.

The iPhone XR costs 7 percent more than last year's entry-level iPhone 8, and 15 percent more than the iPhone 7. The OnePlus 6T, meanwhile, rose 3.8 percent over the OnePlus 6 phone released just six months ago, and a total of 37.6 percent over the last two years.

The data from 11 phone models from 2016 to 2018 shows a pattern of sharp price hikes that we expect to see heighten in 2019 and beyond (See your regional chart below).

Apple has certainly applied the model to other electronics in its lineup, boosting the price on its new iPad Pro and MacBook Air over previous models, and creating wide price swings between the entry-level product and the higher storage version.

These creeping prices across Apple's portfolio and the mobile category signal that costlier devices are here to stay -- and it may be our fault for buying them in droves in the first place. 

When Apple broke the $1,000 barrier for its iPhone X in 2017, critics scoffed at its exorbitant price, but it quickly outsold every other Apple device in each week since it first went on sale in November 2017. Apple's gambit paid off as consumers accepted the higher-price models, and other manufacturers followed Apple's lead. 

The trend of increasingly costly handsets in the top tier underscores the cell phone's importance as an everything-device for communication, work, photography and entertainment. And as processing power, camera technology, battery life and internet data speeds improve generation after generation, the value people attach to a phone is sure to swell.  

"Consumers are prepared to pay a premium for a mobile phone because it is arguably the most important product in their lives," said Ben Wood, the chief research analyst at CCS Insight.

Rising prices aren't unusual on their own. Faster, better components like processors and cameras cost more to make. The financial load of researching and developing new materials also gets folded into the final product. And inflation affects the cost of goods outside of tech, too.

But R&D spending and inflation don't tell the entire story your phone's creeping expense. By increasing the prices of their phones with each iteration, Apple, Samsung and other leaders in the industry are creating an ultra-high-end segment that can make each sale more profitable -- that's important as people start holding on to their phones longer, for three years or more. 

Yep, your phone costs more every year

With few exceptions, phone prices from top brands are on the rise.

"Although overall smartphone shipments will decline slightly in 2018, the average selling price (ASP) of a smartphone will reach $345, up 10.3 percent from the $313 ASP in 2017," IDC analyst Anthony Scarsella said in IDC's Worldwide Quarterly Mobile Phone Tracker, shared with journalists in May 2018. Prices will jump on the high end especially, Scarsella added.

The uptick is immediately noticeable when comparing phone prices from today with the same model released just two years ago.

Apple's prices have risen at a steady rate for both its iPhone and iPhone Plus/Max lines, making the iPhone XS Max a luxury spinoff.

Samsung's Galaxy S, S Plus and Note prices are swinging upward too. Even before the Galaxy Note 9's $1,000 bombshell, the S9 Plus -- last year's iPhone Plus and iPhone X rival -- was already inching toward iPhone X prices

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