What does the trend in
prices of Flagship Smartphones reveal ?
The graph below clearly depicts rising flagship smartphone prices.
** base variant price
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With Apple's latest iPhone X price touching the ceiling of $1000 price-point,
an ultra-premium category of smartphone has emerged and industry in general is
expected to experience a further rise in flagship smartphone prices.
Apple did pave way for more expensive flagships but seriously an average non- geek person never need to spend that much. Budget smartphones
are not only getting better but also cheaper over last 2-3 years. The surprising fact is that the rise in performance of these budget phones is such that they are almost equivalent to 2 year old flagships. They still lag behind to one of flagships phone major selling point i.e. camera quality. Budget phones
in the range of $200 to $300 are most value for money option in the
market.
Similar Trends in Oneplus
smartphone prices
*prices of all models are of base variant
Back in 2014, Oneplus originally started as real flagship killer with
their Oneplus One. It became famous for providing flagship grade specs with
just nearly half the price. It was able to capture everyone's attention to
due to highly aggressive pricing.
As confirmed by above graph, there has been significant increase in
launch price of base variant with every new model released from then
onward.
This clearly reveals company's change in strategy from selling super
value for money smartphones to entering into semi-premium pricing segment.
Here is a comprehensive explanation which should explain a higher price tag by OnePlus.
1. Global Average Smartphone Price
One the most probable reason to start charging premium in prices might be with the case that the average selling price has been rising from last two years. According to market research firm Gfk, the average smartphone price saw a record high 10 percent rise in Q4 of 2017 making global average selling price to $363. Smartphone is single piece of tech that is used extensively by people of all ages. Keeping usage scenario and average use-cycle of around 2 years in mind, people might look to spend a good amount of their income on purchase of a smartphone. The increased purchasing power of consumers also must have played a role in increasing prices.
2. Fierce Competition in Budget Segment Budget segment of smartphone market is targeted by smartphone selling companies in any market, especially in highly price sensitive developing markets like that of India and China. In these countries, Chinese smartphone manufacturers are flooding the market with new smartphone launches every other week. There is a price war among these players to provide better specs than competition at even lower prices. This was not seen earlier as most of buyers knew not much about specs but thanks to media sources like YouTube and various tech websites, smartphone sellers are now targeting consumers with better specification as selling point. It might be the case that phone launched by a company in this price segment of around 15 to 20K is not a good sell just due to the fact that there are several other choices with consumer in this segment. This might have backed Oneplus to go with semi-premium strategy.
3. Spending on Advertisement
It is no surprise to anyone that it is the consumer who ultimately bear the burden of spending on advertisement in form of higher price tags. Oneplus originally started as company which only let their product did the the taking to it's audience. But soon after few years, it started it's advertisement campaign. It's major focus is on social media platforms like Twitter and YouTube. Oneplus strategy is to be as interactive with audience as possible and knowing their view-point and ideas. Oneplus also aims to reach a larger audience. Owing to risk averse nature of previous generation, people ready to spend more than Rupees 35K usually look at any well known brand like Samsung because they don't want to take chance with lesser known ones like Oneplus. Having a TV campaign rolled out with their brand ambassador Mr. Amitabh Bachchan, will help build trust in consumers with old mindset.
Recent Scenario (Launch of Oneplus 6)
As expected, Oneplus 6 was launched with even a higher price point than it's predecessor. The problem is that from it's last two-three launches, increase in number of features by Oneplus is not able to fully justify price hike. On top of that, new phone launches every six month keeps viable consumers guessing of next launch. Oneplus is already dealing with small consumer base in markets like India. It is very hard to think that with price hikes and frequent launches, Oneplus would be able to keep adding to list of people they serve, keeping in mind that any existing customer in these markets do not upgrade their smartphones that often.
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I'm not sure how this never gets mentioned but One Plus phones have very bad software coding. India is the only market where One Plus made an aggressive marketing push with the OP5 and 5T and the official One Plus community threads are flooded with Indian customers who don't know how to deal with Oxygen, an OS less stable than you will find on any other phone. The release strategy where the phone released in spring is obsolete 6 months later because of the T version of the same model is also self-defeating because nobody familiar with what happened to the One Plus 3 or 5 is going to be stupid enough to buy a One Plus 6.
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