Have Flagship Smartphone Prices Peaked?

Analyst Ben Wood, writing for research firm CCS Insight: Smartphone makers have been testing the economic rule of supply and demand for the past decade, seemingly defying conventional wisdom in consumer electronics products by raising prices. Greater utility and the constant of use smartphones combined to grow the value of devices to customers. But it seems that top phone-makers are learning that no tree grows to heaven, as prices beyond the psychological threshold of $1,000 have created sticker shock among some consumers. Apple’s announcement of the iPhone 11 at its annual product event last week largely centered on incremental improvements such as better camera and battery life, but the company’s decision to lower the price of its base flagship smartphone caught our eye. The iPhone 11 will cost $699 in the US. A year ago, Apple introduced the iPhone XR at $749. It’s a subtle, but interesting move that sees Apple shifting its “mid-range” iPhone back to a price of $699, where it previously resided with the iPhone 8. Apple’s decision to lower pricing can be seen as an acknowledgement that it has tested the upper limits of consumer acceptance. At a time when the company wants to expand its number of customers as it builds out its ecosystem of content and services, it’s sensible that it slightly brought down the barriers for consumers to get their hands on the new device.