Smartphone Sales Are Dismal -- and Samsung Just Unveiled a $1,200 Phone
Samsung's TM Roh explains why the company is focused on premium phones like the Galaxy S23 Ultra in a challenging market.
In a tough economy, Samsung is hoping people will see the value of premium phones like the Galaxy S23 Ultra.
It's a tough time to be in the smartphone business. Worldwide shipments tumbled throughout 2022 as customers tightened their purse strings amid economic uncertainty and inflation, according to the International Data Corporation. But that hasn't discouraged Samsung from releasing a new $1,200 (£1,249, AU$1,949) phone at its Samsung Unpacked event on Wednesday.
In fact, the challenging economic environment could create an even bigger opportunity for high-end devices like those in Samsung's Galaxy S23 lineup, according to TM Roh, president and head of Samsung's mobile experience business. The premium S23 Ultra was launched at Samsung Unpacked alongside the Samsung Galaxy S23 and S23 Plus.
"When times get hard, then people would be more cautious in the choices that they make," Roh said through a translator in an interview with CNET. "In other words, they would be looking for greater value to be gained."
Read more: Galaxy S23 vs. the S23 Plus and S23 Ultra: Samsung's New Phones Compared, Spec by Spec
Annual smartphone shipments hit lows that haven't been seen since 2013, according to the IDC. Shipments dropped 18.3% year-over-year in the fourth quarter of 2022, which the firm says is the largest ever decline in a single quarter.
"What this holiday quarter tells us is that rising inflation and growing macro concerns continue to stunt consumer spending even more than expected and push out any possible recovery to the very end of 2023," Nabila Popal, research director for the IDC's Worldwide Tracker team, said in a press release.
But at the same time, Roh's comments and other industry data suggests that premium phones are still hot sellers. And that's not just specific to Samsung. The average selling price of an iPhone rose 7% year-over-year in the third quarter of 2022, according to Counterpoint Research. That same report describes the premium smartphone market as being more resilient to economic uncertainty.
"In other words, they will be looking more for quality, more for premium," Roh said.
More on Samsung Unpacked
At $1,200, the Galaxy S23 Ultra is one of the most expensive phones available. Apple's top-of-the-line iPhone 14 Pro Max starts at $1,099, while the Pixel 7 Pro starts at $900. Samsung sells phones at a variety of price ranges, with options in the Galaxy A series starting under $300 all the way up to the $1,800 Galaxy Z Fold 4.
But Roh says the company has seen strong growth in its Galaxy S lineup throughout 2022.
"Versus S21, there has been growth in sales in double digits," he said referring to the Galaxy S22, adding that the Galaxy S series' portion of Samsung's total smartphone sales also grew in 2022 compared to 2021.
"And we believe that portion is going to grow further still this year," he said.
The Galaxy S23 lineup brings a slew of improvements, particularly on the Ultra model, which is getting a 200-megapixel camera for the first time. All three new phones start at the same price as their predecessors, but Samsung is providing twice the storage at the base level for the Plus and Ultra models.
Samsung's starting price for its annual Galaxy S family is higher, however, because it didn't release a "Fan Edition" phone this year. Samsung is instead keeping the Galaxy S22 in its lineup at a cheaper $700 price, much like how Apple keeps previous iPhone models available. Last year Samsung took a different strategy by releasing the $700 Galaxy S21 FE just before the Galaxy S22 lineup arrived. That phone was a cheaper alternative for shoppers who wanted to spend a little less, but still get faster performance and better cameras than what's available on its lower-priced Galaxy A devices. Apple also cut the iPhone Mini from its lineup in 2022, meaning the cheapest iPhone 14 model is also pricier than before.
Roh couldn't say much about future "Fan Edition" phones, but he didn't rule out the possibility of launching another one either.
"The fact that there was no Fan Edition for S22 does not mean that there is not going to be any Fan Edition ever," he said. "But that does not also mean that we can specify when the next one is going to be launched."