Are Smartphones Getting More Expensive? Reasons Behind the High-End Trend of Domestic Brands

Are Smartphones Getting More Expensive? Reasons Behind the High-End Trend of Domestic BrandsSmartphones have become an indispensable part of people's daily lives. Many users own smartphones, and the frequency of device upgrades is also accelerating

Are Smartphones Getting More Expensive? Reasons Behind the High-End Trend of Domestic Brands

Smartphones have become an indispensable part of people's daily lives. Many users own smartphones, and the frequency of device upgrades is also accelerating. However, according to the latest market forecast report by Counterpoint Research, the global average selling price of smartphones is expected to increase by 3% year-on-year in 2024, reaching $365 (approximately 2641). Moreover, the Chinese smartphone market saw a rapid acceleration towards high-end in the first half of 2024, with the segment exceeding $600 (currently around 4338) experiencing an 8% year-on-year sales increase, while the overall market grew by 4%.

So, why are domestic smartphones becoming increasingly expensive? We have summarized the following five reasons for this phenomenon:

1. Rise of the High-End Market

Data shows that consumer demand for high-end devices is steadily increasing, especially among high-income groups in developed and emerging markets. While low-priced phones still exist and are even thriving, when consumers demand more from their new devices, mid-range and low-end models naturally struggle to attract users.

The rise of the high-end market is not just reflected in sales volume but also in selling prices. Data shows that Chinese consumers have a strong desire and purchasing power to pursue higher quality and higher-performance smartphones. Therefore, even if domestic smartphones are priced high, they can still evoke a desire to choose if they offer a sufficiently exceptional user experience.

2. Intensified Competition Among Manufacturers

In recent years, domestic smartphone manufacturers have gradually gained consumer recognition and trust by continuously enhancing product performance and features. However, this has also increased investment and deployment in the high-end market. Flagship models from domestic smartphone brands such as Honor Magic7, iQOO 13, OPPO Find X8 series, OnePlus 13, vivo X200 series, and Xiaomi 15 series have all put tremendous effort into technological innovation and user experience.

In this context, competition among new devices is fierce, and the extent of "hardware stacking" has become quite exaggerated. This makes it difficult to control costs in the long run. As a result, the pricing of new devices is almost always around 4000 or even higher, which is inevitable to maintain profitability for manufacturers.

3. Increased Costs

In terms of chips, the Snapdragon 8 Gen 2 for Galaxy and Dimensity 9400 processors this year are truly impressive. They are built using a 3nm process and feature new architectures. Moreover, smartphone manufacturers have introduced numerous selling points in their new devices, such as ultrasonic fingerprint unlocking technology or periscope telephoto lenses. Battery life has also significantly improved, with most devices now boasting a battery capacity starting at 6000 mAh. These factors make it difficult to control costs.

Furthermore, some new devices have incorporated satellite communication technology, further driving up the cost of new devices. This is a real challenge for manufacturers.

4. Efforts in Self-Developed Technologies

Undeniably, simply "stacking hardware" is insufficient to captivate users. It requires self-developed technology to stand out. Currently, in the domestic smartphone market, most manufacturers have introduced self-developed technologies, including chips for signal or battery life.

Take Huawei smartphones as an example. They have not only developed their own Kirin processors but also introduced the new HarmonyOS NEXT version, exhibiting strong technological appeal. However, self-developed technologies require significant financial resources and effort. This means that the costs need to be spread across devices using these technologies, making it difficult to maintain low pricing.

5. Growing Consumer Demand

As the saying goes, "There is no demand, there is no supply." Similarly, smartphone manufacturers would not focus on the high-end market if there were no demand. This is like the small-screen market. If there is no demand, manufacturers will not invest in it. The current market shows that smartphone users are willing to pay for devices with higher performance, better camera capabilities, smoother gaming experiences, and other advantages.

This has resulted in strong sales for high-end flagship smartphones. If users are not willing to pay, it is unlikely to achieve significant sales. In this case, smartphone manufacturers will not continue to release high-end models, which is a realistic and true factor.

Conclusion

Based on the five points discussed above, the high-end trend in the smartphone market is an inevitable outcome of technological advancements and evolving consumer demands. In the future, the presence of low-end devices may become increasingly diminished.

What are your thoughts on the increasing price of domestic smartphones? Share your opinions in the comments below.