Apple and Samsung struggle to sell us super-pricey smartphones
We're just not that into paying $1,000 for a phone anymore.
Shara TibkenFormer managing editor
Shara Tibken was a managing editor at CNET News, overseeing a team covering tech policy, EU tech, mobile and the digital divide. She previously covered mobile as a senior reporter at CNET and also wrote for Dow Jones Newswires and The Wall Street Journal. Shara is a native Midwesterner who still prefers "pop" over "soda."
Apple and Samsung this week reported earnings for the June quarter that didn't convey much optimism in the high-end phone market. In Apple's case, iPhone sales dropped 12% from the previous year, and its overall net income tumbled 13%. Analysts believe the iPhone XR, the company's cheapest new model at $749, has become more popular than Apple's $999 iPhone XS and $1,099 iPhone XS Max. At the same time, people are holding off on purchases as they wait for the iPhone 11 to arrive in September.
Samsung's overall handset sales, meanwhile, rose about 7% to 24.3 trillion won (about $20 billion) -- and the company increased its lead in the global smartphone market share by two percentage points to 22%, according to Strategy Analytics. But the gain was largely because of Samsung's cheaper A Series devices. Its mobile operating profit was 42% less than a year ago, and revenue from Samsung's flagship Galaxy S lineup, which starts at $750 for the S10E, dropped because of "weak sales momentum for the Galaxy S10 and stagnant demand for premium products," Samsung said.
Watch this: iPhone XR: It's the iPhone you should buy
If you've exercised any semblance of fiscal responsibility, these results shouldn't shock you. Phone prices have been increasing, and people are upgrading less often. If someone's buying a $1,000 phone with all the bells and whistles they can imagine, they tend to hold onto it longer than before. In the US, consumers now upgrade to a new model about every three years instead of every two. At the same time, software updates make old phones feel new, hardware designs aren't changing much from year to year, and less expensive devices are getting features previously found only in pricey flagship phones.
For many people, that's good enough.
"Innovation is more on the software side than the hardware side," Creative Strategies analyst Carolina Milanesi said. "The life span of the device lengthens because you're getting so much more from it."
Cheaper phones for the win
Phones may be getting more expensive, but that doesn't mean we're buying. For Apple and Samsung, their less expensive flagship devices are now attractive for many people.
The two devices, both the cheapest versions of their flagship lineups, are proving to be popular with buyers. Canalys said the iPhone XR was the "silver lining" in Apple's otherwise weak June quarter iPhone sales. The research firm estimated that the device accounted for about 38% of Apple's shipments in May. And Apple CEO
said the company benefited from in-store trade-in and financing programs.
But it's not just the discounted versions of flagships that are more popular than their pricey siblings. In the case of Samsung, it's the company's Galaxy A lineup that's attracting buyers. As Samsung noted, its overall smartphone shipments increased from the first to second quarter because of "strong sales of the new Galaxy A Series, including the Galaxy A50 and A70."
Many of those devices have features similar to those found in Samsung's pricier phones, and some even have characteristics not found in the Galaxy S and Note lines.
For only $350, customers can buy the Galaxy A50 for
and other US networks. The device includes a 6.4-inch display and three cameras on the back. Both those features are also found in the Galaxy
, which starts at $1,000.
The Galaxy A80 became the first, and so far only, Samsung phone to sport a rotating, pop-up camera when it launched in April. The phone's sole camera array automatically flips around when toggled into selfie mode and contains a 48-megapixel main camera, an 8-megapixel ultrawide and a time-of-flight sensor that can be used for facial recognition. The A80 also has an "intelligent battery" that learns your daily routine and app usage patterns to optimize your phone's power consumption. No Samsung flagship devices have the swivel camera, but the battery smarts appear in the Galaxy S10.