Customers switch off when phone prices near $3000

Thursday, 18 April 2019

Tech giant expects quarterly revenue of $84 billion, below estimates, and acknowledges iPhone demand is waning.

Anyone who has researched buying a new phone in the past year will have noticed one thing: Smartphones are getting really expensive. And new data released by PriceSpy suggests that Kiwis aren't prepared to keep paying top dollar for their new devices.

Not even iPhones.

The price of phones going up isn't exactly news. We, the consumers, are demanding more and more features from our smartphones. And manufacturers are duly delivering this.

Face recognition, in-screen fingerprint sensors, continuously better cameras, edge-to-edge HD displays. All these innovations have seen the price of high-end phones explode well over the $2000 mark.

* Chinese startup Xiaomi is out to challenge Google, Amazon

* Huawei unveils iPhone X challenger**

And the recent $2799 price tag for the iPhone Max XS 512GB suggests that it's not about to slow down any time soon.

An intriguing trend that PriceSpy's data below highlights is that there's a limit to how much we're prepared to pay for our smartphones. And, for most of us, $2000 is the line we're not willing to cross.

Looking at the PriceSpy's search data for the top 10 most popular phones, Apple is only noticeable by its relatively poor performance.

Top 10 most popular phones February 2019 (PriceSpy.co.nz)

Huawei Nova 3i 128GB

Samsung Galaxy S9 64GB

Samsung Galaxy S8 64GB

Samsung Galaxy S7 32GB

Samsung Galaxy Note 9 128GB

*Samsung Galaxy S9 Plus 64GB

Apple iPhone X 64GB

OnePlus 6 128GB

Apple iPhone XR 64GB

OnePlus 6T 128GB

*Most expensive phone in top 10 ($1699)

The interesting thing about this chart is the lack of showing from Apple's newest flagships, the iPhone XS and XS Max. In its place are sub-$2000 rivals from Huawei, Samsung, and OnePlus.

Amazingly, Apple's lesser iPhones, the 'affordable' iPhone XR and 2018's iPhone X, outrank the new flagships.

Why isn't the iPhone XS in the top 10?

It could be argued that a lot of this is to be expected. Apple launches its smartphones every September, while Samsung's biggest phone launch is in February. That suggests the poor performance is a result of Apple's phones being five out of date compared to some of its rivals on this list.

This would be inaccurate, though. The table below shows PriceSpy's most popular phone searches for October 2018 - when the iPhone XS went on sale.

The common theme? No iPhone XS.

Top 10 most popular phones October 2018 (PriceSpy.co.nz)

Huawei Nova 3i 128GB

Samsung Galaxy S8 64GB

Samsung Galaxy S9 64GB

Samsung Galaxy Note 9 128GB

Samsung Galaxy S7 32GB

Apple iPhone X 64GB

Samsung Galaxy S9 Plus 64GB

OnePlus 6 64GB

Huawei P20 Pro 128GB

Shoppers aren't rushing to buy the pricey new iPhone models.

Apple iPhone 8 64GB

When a new iPhone doesn't make the list of the top 10 most popular phones, something has gone seriously wrong.

So what's going on?

A much more logical argument is that new flagship iPhones are too expensive. Kiwis aren't prepared to pay $2799 for the top-spec iPhone. Fair enough.

PriceSpy has search data reflects this, but it's a little confusing, so bear with me. PriceSpy calculates a phone's popularity based on the number of clicks a product receives. From its current data pool: 108,000 is the least popular product, and 1 is most popular.

Interestingly, the iPhone XS Max 512GB, Apple's most expensive and feature-rich phone, only ranked at number 830 in this chart when it first went on sale in October 2018. A pretty shocking statistic for the world's most popular smartphone manufacturer.

Back then, the iPhone XS Max 512GB had a hefty RRP of $2799. The price of this phone has dropped 17 per cent (-$400) since then and, predictably, its rank improved by 300 places in PriceSky's popularity chart as a result.

It's crucial not to misinterpret this data. PriceSpy's (see below) also published data that shows people are still searching for Apple devices. A lot.

Most popular phone brands for 2019 to date

Samsung - 38.9 per cent

Apple - 20.4 per cent

Huawei - 15.7 per cent

OnePlus - 5.7 per cent

Xiaomi - 4.6 per cent

The difference is that the price of the new iPhones is putting consumers off clicking through to retailer pages.

Instead, customers are opting for better value devices. This trend isn't a new one. Samsung, Huawei, Xiaomi etc. manufacturer mid-range phones, with mid-range specs, for this very reason.

A more worrying trend, for Apple, is that customers are now more willing to buy its own devices, that are more than a year old, rather than pay the RRP for a new iPhone.

Should Apple be concerned? Probably not. The company just posted quarterly profits of US$51.98 billion (NZ$75.1b) from the sales of iPhones alone.

A more measured response is to expect Apple to continue to release more affordable smartphones like the iPhone XR.