The Reign of the Fancy Phone Is Over

Few people can justify spending $300 on a bit of extra camera zoom

The annual hype around smartphones tends to focus on what the tech press affectionately refers to as “flagship” phones. These are devices like Apple’s iPhone 11 Pro, which starts at $1,000 and is marketed as a film studio in a box, or Google’s Pixel 4, whose radar chip and voice-powered assistant combine to create a phone you don’t always have to touch, starting at $800. But as the banner features of these premium phones have become more frivolous, consumers seem to be increasingly satisfied with their more basic counterparts.

Until fairly recently, manufacturers could rely on their most innovative, most expensive phones to also be their most popular. Apple’s iPhone 6, iPhone 6s, and iPhone 7 (and their Plus-sized versions) — released in 2014, 2015, and 2016, respectively — all became Apple’s top sellers when they were released. Apple would usually offer a small price cut on the previous year’s model, using the older devices as a “budget” category.

In 2017, when Apple released the iPhone X, the first iPhone that started at $1,000 at launch, some speculated that the high price would deter customers. But the most expensive iPhone sold more than any other. And at that point, there were plenty of other options: The iPhone 8 and iPhone 8 Plus, the first iPhones with wireless charging, came out just a couple months before the iPhone X launch; the iPhone 7 was reduced to an attractive $550 price point; and Apple was even still selling its popular budget iPhone SE for $399. Even so, consumers flocked to the most expensive iPhone on the market.

The iPhone X’s success convinced a wave of other smartphone manufacturers, including Samsung and Oppo, that they could also push the prices for their best phones into the four-digit realm and continue selling like crazy.

But the iPhone X may have been the exception, not the rule. It offered enough new features to justify the higher price, introducing Face ID for the first time and doing away with the home button, for instance. Most modern expensive smartphones don’t make these leaps. And often, the features manufacturers add in hopes of justifying higher price points aren’t enough to drive sales.

Apple stopped reporting its own iPhone sales numbers in 2018. Analytics firm Consumer Intelligence Research Partners found that the iPhone XR, which launched in 2018 at a relatively modest $750 starting price, was the most popular iPhone in the United States during the holiday quarter that it was released, despite the more expensive, high-end iPhone XS having been released a month earlier, giving it more time to log sales that quarter. For the first time in years, consumers didn’t prefer the newest, most expensive model.

It’s not hard to understand why. The iPhone X was a transformative step forward. Placed side by side with the iPhone 8, the benefits of a phone with Face ID, new gesture controls, and an attractive design were obvious. The differences between the iPhone XR and the XS were less noticeable. The phones looked almost the same. Both incorporated Face ID, but the XS had an extra camera and a slightly nicer screen. Some customers felt those features were enough of an upgrade to spend an extra $250, but many did not.

Many of the extra features added to new high-end phones in the past couple years could similarly be categorized as needless added expenses. The iPhone 11 Pro—Apple’s most expensive phone, starting at $1,000—adds a telephoto camera lens. There are a few other minor differences between that phone and the $700 iPhone 11, both released in 2019, but the ability to zoom is pulling the bulk of that extra $300 weight.

The lack of groundbreaking new features may be one reason phone sales declined in 2019 and consumers started keeping their phones longer. It may also contribute to a trend of consumers being happy enough with less expensive phones. Six months after Google released its $800 Pixel 3 to tepid sales in 2018, it launched the less flashy Pixel 3a in May 2019, roughly halfway between the release of Google’s more expensive Pixel 3 and Pixel 4 handsets. This device featured the exact same highly rated camera as the Pixel 3, still had a headphone jack, and used the popular rear fingerprint sensor that the Pixel 4 ditched. All for a price point starting at $400, and frequently on sale for even less.

Super-expensive high-end phones still have their place, but they’ve become increasingly, well, boring.

It was immediately a hot seller. Google said the Pixel 3a helped double its year-over-year phone sales during the quarter it was released. Overall, Google still sells relatively few handsets compared to the broader smartphone market, but this growth helped it become one of the only hardware manufacturers to see an increase in U.S. sales in 2019.

The Pixel 3a’s low price helps explain part of its appeal — cheaper things tend to sell better than expensive things, because more people can afford them — but its design philosophy may also be resonating with phone buyers. Rather than cramming a device full of nice-to-haves that add to its price, the 3a focuses on basic features that consumers use every day.

Early leaks of the upcoming successor to Google’s Pixel 3a show the same minimalist design philosophy. The rumored Pixel 4a continues to use the rear fingerprint sensor, despite the Pixel 4 upgrading to face recognition, and still employs the headphone jack that Google says appeals to its more budget-conscious customers, while the Pixel 4 has removed the port to cram in more components, like the radar chip. The leaked design also features a “hole punch” camera that leaves no space for Google’s fancy radar chip. That means no facial recognition, no fancy motion controls, and no waving at Pikachu.

The headphone jack on the Pixel 4a also implies that it will lack waterproofing, since it is generally more complicated and expensive (though not impossible) to seal devices with these ports. Conventional wisdom in the tech world is that foregoing water-resistance ratings is a sales killer. But paying for an official IP67 or IP68 water-resistance rating can cost as much as $30 per handset, according to Pete Lau, CEO of OnePlus, a device manufacturer that has sold itself (somewhat successfully) as having the highest specs at the lowest price point possible.

OnePlus made a minor marketing snafu last year when one of its ads implied that official water-resistance ratings are a waste of money. But the company is probably right that most people understand that electronics and water don’t mix. Few people take their phone swimming, and touchscreens don’t work very well in the rain. So why not skip the added expense when the baseline product is good enough?

Super-expensive high-end phones still have their place, but they’ve become increasingly, well, boring. Which is okay. Not everyone needs several fancy camera lenses, officially certified waterproofing, or radar-powered facial recognition. Those options are there for the people who will use them, while the average smartphone buyer is more than happy with a simple, moderately inexpensive phone that they can still plug their old headphones into.

All Rights Reserved for Eric Ravenscraft

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