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Not buying it: consumers resist $1,000 smartphones

Image credit: reuters

A report from the NPD group has found that fewer than 10 per cent of American consumers are spending $1,000 or more on a new smartphone.

These days, the largest smartphone manufacturers can be expected to offer their flagship phones at prices nearing or exceeding $1,000.

Last year saw the launch of the iPhone X range, the Huawei Mate 20 range and the Samsung Galaxy S9 range, all featuring flagship phones around the $1,000 mark. Many of the early 5G phones and phablets launched this year - such as the Huawei Mate 20 X 5G - topped $1,000, while the price of some phones with novelty form factors such as the Samsung Galaxy Fold can reach almost $2,000.

Despite the offer of some outstanding handsets, consumers are reportedly not buying into the ultra-premium phone trend. According to NPD’s Mobile Phone Tracking survey, fewer than 10 per cent of American consumers are spending this much on devices.

This could be a concern for some manufacturers hoping to encourage consumers to switch to a 5G handset in the initial wave of 5G phones (and before their existing handset actually needs replacing), given that the typical 5G handset currently retails at around $1,200.

“Consumers are holding onto their smartphones for longer periods, which has presented a challenge for the smartphone market,” said NPD analyst Brad Akyuz. “Manufacturers and carriers are expecting 5G to help reinvigorate the upgrade cycle, but pricing could present another hurdle.”

On a more positive note for smartphone manufacturers and network operators, NPD reports that nearly three-quarters of consumers in the US are at least aware of 5G, up from 44 per cent in 2018. 33 per cent of smartphone owners say that they are interested in purchasing a 5G phone.

“Overall awareness and purchase intent reported by consumers is high, but only a small segment of the market can afford these $1,000+ devices,” said Akyuz. “This provides an opportunity for both carriers and manufacturers to focus on diversifying their 5G portfolios by introducing more affordable mid-tier 5G models to enjoy faster adoption rates.”

UK mobile network operators started to roll out their 5G networks throughout 2019, making the UK one of the first countries to adopt 5G.

In South Korea, which already has millions of 5G users, a government official criticised Samsung for jumping the gun on 5G by choosing not to launch a 4G-capable version of its Galaxy Note 10 model.

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