Domestic Smartphones Charge into High-End Market, Price Hikes Behind Flagship Phones: Will You Need to "Pay More" for Face in the Future?

Domestic Smartphones Charge into High-End Market, Price Hikes Behind Flagship Phones: Will You Need to "Pay More" for Face in the Future?Recently, market research firm Counterpoint Research released a report on the high-end market situation for smartphones in China in 2024. While the overall market sales saw a 4% year-on-year increase, the market share for models priced over $600 (approximately 4,300 yuan) saw an 8% jump

Domestic Smartphones Charge into High-End Market, Price Hikes Behind Flagship Phones: Will You Need to "Pay More" for Face in the Future?

Recently, market research firm Counterpoint Research released a report on the high-end market situation for smartphones in China in 2024. While the overall market sales saw a 4% year-on-year increase, the market share for models priced over $600 (approximately 4,300 yuan) saw an 8% jump. Combined with the firms report that iPhone sales declined by 13% during the same period, it can be concluded that the growth in the high-end market is mainly driven by domestic smartphone manufacturers.

The high-end market in China is rapidly expanding, with more and more consumers accepting flagship devices priced over 4,000 yuan. However, in the comments section of this report, many netizens disagree that domestic brands have successfully established themselves as high-end brands, arguing that expensive doesn't equate to high-end. They also express dissatisfaction with the continuous price hikes of Android flagship phones. From the perspective of consumers, it doesn't matter whether domestic smartphones have successfully created a high-end image. What matters is whether consumers are getting value for their money as domestic brands charge towards high-end and flagship models constantly increase in price.

iPhone No Longer Holds Exclusive Reign Over High-End Market

Once upon a time, iPhone was synonymous with high-end smartphones. It wasn't until the rise of Huawei's Mate and P (Pura) series that iPhone's monopoly ended. Around 2020, Huawei's high-end smartphone sales in China reached par with iPhone. Due to various factors, Huawei faced production capacity challenges, forcing them to temporarily suspend updates to the Mate series. Fortunately, Huawei wasn't alone in this endeavor. Other domestic brands like OPPO, vivo, Xiaomi, and Honor also continued to explore the high-end market, achieving success by relying on flagship-level experiences.

The actual experience of a smartphone stems from two aspects: hardware configuration and system & ecosystem. Hardware has always been a strong point for domestic smartphones. While iPhone 11 was still using a 720P screen, domestic brands were already experimenting with 2K 90Hz screens. Even today, the standard iPhone 16 still lacks high refresh rate support, becoming a subject of ridicule among Android users.

Apple's A-series processors were once superior in performance to Android phones. However, thanks to the efforts of numerous industry players like Arm, Qualcomm, MediaTek, and TSMC, Snapdragon and Dimensity flagship chips have caught up to the A-series in performance. Games like Genshin Impact, which used to struggle to maintain a smooth 40fps on flagship devices, can now run at 60fps with high graphics settings on most flagships. Some manufacturers have even added super-resolution and super-frame rate features to further enhance game quality and smoothness.

Android flagships and iPhones are neck and neck in the imaging arena. iPhone holds a slight advantage in video recording, while Android phones excel in photography. Additionally, Android flagships generally offer higher optical zoom capabilities, providing an advantage when capturing distant scenes.

Software-wise, looking at functionalities alone, there isn't a significant difference between Android and iOS. In recent years, iOS has introduced several new features, including free application icon arrangement, game mode, application lock, and hidden applications. However, the closed nature of iOS and the open nature of Android each have their respective advantages.

The mobile phone industry has progressed significantly. Domestic manufacturers have made remarkable strides, and their flagship devices now offer experiences comparable to iPhones, while maintaining a price advantage. The newly released iPhone 16 series starts at 5,999 yuan, while Android phones, despite price increases, generally start under 4,599 yuan. Domestic consumers can now purchase flagship phones with experiences comparable to iPhones at a significantly lower price. The only possible missing element for domestic flagships is "brand," as their high-end image isn't as established as Apple's.

The criticism surrounding price hikes for domestic flagship models could stem from the fact that some users find it hard to digest the fact that brands once positioned in the lower-end market are now rising to challenge the high-end segment. While underdog stories are classic tropes in fiction, they aren't universally appealing.

The rise of domestic smartphone manufacturers has a far-reaching impact beyond the high-end market. Through massive overproduction and technology upgrades, they are lowering costs, making features once exclusive to flagships now available in mid-to-high-end models. This includes features like periscope telephoto lenses, super-fast charging, and 2K screens. The upcoming Honor 300 series is likely to feature ultrasonic fingerprint technology, a feature absent even in many flagship devices. Considering the recent price changes for flagship devices and the specifications of mid-range models, it's evident that the high-end strategy of domestic smartphone manufacturers is entering its third phase.

Domestic Brands' Third Charge Towards High-End, Looking Up to Apple Becomes a Thing of the Past

Prior to 2020, domestic smartphone manufacturers were in the first stage of their high-end strategy, with brands exploring various directions without a clear roadmap for their future trajectory. During this period, domestic brands used iPhones as a benchmark to develop products, with some flagships even being dubbed "iPhone Lite Versions."

From 2020 onwards, domestic smartphone manufacturers entered the second stage of their high-end strategy. Android phone manufacturers began raising the starting price of their flagships to around 3,999 yuan, while simultaneously offering more compelling hardware specifications. During this time, OPPO revived the Find series and transformed it into today's Find X series, raising the Reno series to a near-flagship status. vivo elevated the X series to a flagship position, while the NEX series, which previously held this role, was discontinued. Xiaomi's digital series solidified its high-end position, becoming somewhat of a benchmark for flagship devices. In addition, various manufacturers adjusted the positioning and product planning of their sub-brands, with Redmi, iQOO, and realme experiencing rapid growth.

While high price doesn't necessarily equal high-end, high-end products can't be too affordable, as it can affect product positioning. The domestic brand that has most clearly pursued Apple's price strategy is undoubtedly Huawei. The starting price of the Pura 70 series is 5,499 yuan, matching the iPhone 16 series.

This year, price increases for Xiaomi 15, OPPO Find X8, vivo X100, and other new flagship series represent the beginning of the third phase of domestic brands' high-end strategy. Without a doubt, flagship Android phones from various brands will continue to rise in price gradually until they match Apple's pricing. After all, as flagships, if they aspire to reach the same level as Apple in terms of quality, their price should align accordingly. They shouldn't be mere budget versions of Apple's flagship devices.

However, consumers have no reason to worry. While flagships typically disregard cost-effectiveness, domestic flagship phones will still offer better value for money than iPhones.

The rise of domestic suppliers has given domestic smartphone manufacturers more confidence to charge into the high-end market. A few years ago, flagship devices were primarily equipped with Samsung screens and Sony sensors. Today, brands like BOE, Huaxing Optoelectronics, and OmniVision have become major suppliers of components for flagship devices. Before the emergence of domestic supply chains, overseas suppliers held the dominant position. Xiaomi, after a falling out with Samsung, saw Lei Jun personally apologize to Samsung in South Korea three times, while Huawei also faced a situation of being cut off from supplies despite strong smartphone sales. With the resurgence of domestic supply chains, domestic smartphone manufacturers can now focus wholeheartedly on product development without worrying about supply disruptions or targeting.

While domestic flagship phones continue to gain market share, various brands haven't forgotten about maintaining the mid-to-low-end market. Numerous high-value-for-money mid-to-low-end models are constantly being released, with many flagship chips appearing in mid-range devices priced between 2,000 and 3,000 yuan the following year. This truly achieves the combination of affordable prices and high-end performance.

The mid-to-high-end market, steadily becoming the main driver of phone sales for manufacturers, is receiving greater attention. Features previously reserved for flagships are now being aggressively incorporated into this segment. However, the price increase for mid-to-high-end models, replacing the previous mid-tier flagship models, has raised concerns among some consumers. With price increases becoming a trend, will there still be affordable value-for-money models available?

Price Increases in the Smartphone Market Are Here to Stay, Early Purchases Offer Greater Value

Consumer complaints about flagship price hikes reflect their worry about the future availability of high-configuration, low-priced value-for-money models, leading to increased purchase costs. We can dispel these concerns. The primary cost for mid-to-low-end devices lies in the chipset. TSMC and Samsung are continuously improving their manufacturing processes, reaching higher yields. The cost of chips will gradually decrease. Combined with the reduction in screen and sensor costs, these cost decreases will be reflected in prices. This means there will be further room for improvement in the specifications of mid-to-low