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Is the Samsung Galaxy Note 9's $1,000 price tag a mistake?

Samsung has been struggling to attract people to its pricier phones -- but that hasn't stopped it from boosting prices even more.

Sarah Tew/CNET

Looks like Samsung's idea of "reasonable" Galaxy Note 9 pricing actually means higher pricing.

The company's new phablet -- unveiled Thursday during an Unpacked event at the Barclays Center in Brooklyn, New York -- sports various tweaks from last year's Note 8, like a bigger battery, more internal storage and expanded S Pen stylus capabilities. But one of the most notable changes from the Note 9's predecessor is the 9's increased price.

Samsung said the 128GB version of the phone, its lowest offering, will cost $1,000 when it hits stores Aug. 24. The 512GB Note 9 model will set buyers back $1,250.

The Note 8, when it launched a year ago, cost $950 for 64GB of storage, if bought directly from Samsung. And March's Galaxy S9 Plus, which has the same camera and processor, costs $840 for the 64GB version when purchased from Samsung, $890 for the 128GB and $960 for the 256GB.  

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In late July, Samsung said during its quarterly earnings announcement that it would "seek to expand sales by introducing a new Galaxy Note earlier than usual, which offers exceptional performance for a reasonable price." Many believed that meant the same or even lower pricing than the Note 8.

The Note 9's higher price is part of a broader trend of smartphones hitting your wallet harder than ever, kicked off by last year's $1,000 iPhone X. It's not just phones on the super-premium end -- even budget phone makers like OnePlus and Xiaomi have steadily bumped up their prices as well. It's a testament to how much we value our phones, but Apple and Samsung are pushing the upper limit.

"Samsung and Apple are both testing the waters on super phone pricing," Moor Insights & Strategy analyst Patrick Moorhead said. He noted that Samsung's higher pricing "is a good deal" because of the camera, display and S Pen features, but he still expects to see discounts for the Note 9 "during the holidays to be even more competitive."

You are getting more for that extra moola: the Note 9 gets double the flash storage and a bigger battery.

That sounds like a pretty good deal -- until you consider micro SD cards cost almost nothing, especially for Samsung, which is the world's biggest flash memory maker. You can purchase a 64GB micro SD card from Amazon for $6 or a 256GB version for $13.90. Even Samsung's fancier micro SD cards cost $17.99 for 64GB or $34.99 for 128GB.

As CNET's Jessica Dolcourt said in her first impressions of the Note 9, after learning about the Note 9's pricing, "it suddenly became a struggle to think about anything else."

Device upgrades?

Samsung believes it has enough changes in the Note 9 to woo both its die-hard Note fans and its customers who haven't upgraded their devices in several years.

"The disproportionate amount of the volume of people buying new phones is not coming from people who've owned [their old devices for] a year," Drew Blackard, Samsung senior director of smartphone product marketing and portfolio strategy, said in an interview. For owners of 2015's Note 5 or older devices, the Note 9 is a big step up, he said.

The device comes in two colors in the US, ocean blue (with a bright yellow S Pen) and lavender purple, and it features new AI camera technology that can detect what images are and automatically adjust its settings. Samsung packed in a larger, 4,000-mAh battery, much bigger than last year's 3,300mAh version, and added Bluetooth to the S Pen to let it do things like act as a powerpoint or camera remote. 

Still, the device looks largely the same as 2016's ill-fated Note 7 and includes many of the same components as the S9 Plus, like the processor and camera. 

The Note 9 can be preordered Aug. 10 and will hit store shelves Aug. 24. And for the first time, Samsung's newest phone will be the same price across carriers. Last year, Blackard noted, Note pricing ranged from about $940 to $969, depending on which carrier sold it.

Following the Apple trend

The Note 9's pricing is on par with Apple's iPhone X, the most expensive iPhone ever sold. The 64GB iPhone costs $999 while the 256GB phone costs $1,149. Though the iPhone X is $200 more than the previous most expensive iPhone, the 7 Plus, that hasn't really stopped people from buying the device. Apple said it's been the best-selling iPhone since its launch in November, and that's helped boost the iPhone's average selling price to $724 in the June quarter from $606 a year earlier.

But Samsung hasn't fared as well. The Galaxy S9, which hit the market in March, costs more than last year's Galaxy S8 if bought from a wireless carrier. But Samsung has said S9 and S9 Plus sales have been "slow." In the second quarter -- the first full period of Galaxy S9 sales -- Samsung saw its market share tumble 11 percent from the previous year, according to IHS Markit.

And it's also seen the average selling price for its phones fall while its rivals' ASPs have risen. According to researcher IDC, four of the top five phone vendors -- Apple, Huawei, Oppo and Xiaomi -- saw a higher average selling price for their phones in 2017 over 2016. Only Samsung's ASPs declined during the same period, and the trend seems to be continuing, noted IDC analyst Tom Mainelli. In 2017, Samsung's ASPs slid to $318, from $319 in 2016. In 2015, its ASPs were $344, he said.

The slide is due to "a wide range of reasons, from marketing to product mix to stiff competition," Mainelli said.

Unfortunately for Samsung, that's likely to continue -- at least until it adds something you're willing to pay more for. That might not be more flash memory and a bigger battery.

For some phone buyers, the Note 8 might be good enough. 

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