It looks like we may have hit the ceiling with respect to what people are prepared to pay for a flagship smartphone and cheaper alternatives are benefiting.
Counterpoint Research has released some interesting data tracking the global smartphone market by vendor and also by price tier and region. This kind of slicing and dicing of data can reveal some interesting trends and in this case it uncovers some significant movement in the price tiers immediately below premium.
Apple continues to kick ass at the very top, and it’s hard to see this ever changing given the unique differentiators it has in the form of software, brand, loyalty, etc. But with the start of the iPhone X era, Apple decided to test the market’s price tolerance by going over $1,000 for the basic version of a phone for the first time. It seems to have got away with it, but these new numbers indicate it’s also driving demand for cheaper devices that are almost as good.
You can see the chart below. Counterpoint says and smartphone costing $400 or more is in the premium segment, but then subdivides it by price tier. Above $800 Apple has a near monopoly and then it largely shares the $600-$800 tier with Samsung. Below that, however, is where the Chinese vendors come in, with OnePlus being especially interesting as it’s far less reliant on its domestic market than the likes of Oppo and Vivo. It is doing especially well in the UK and India, in the latter case becoming the leading premium smartphone vendor by volume for the first time in Q2 2018.
We spoke to Neil Shah of Counterpoint to get some insight into what’s going in in this price tier. “As smartphone users mature on the usage experience curve they are looking for premium specs and experience,” he said. “However, the bulk of them are not able to afford or invest more than $800+ for a phone as $800+ is the new normal for premium specs.
“Hence, there is a pent-up demand for ‘affordable flagship’ grade premium smartphones. Players like OnePlus has been able to offer the flagship grade specs at almost $500-$600 price points helping it significantly grow share. OnePlus has been expanding swiftly in Western European markets with growing popularity especially in Nordics, UK, Germany and so forth hitting that affordable premium price points.”
The other table served up by Counterpoint was a top-5 list of premium tier vendors by region. As you can see, OnePlus is among the leaders in Western Europe and APAC excluding China. Apple and Samsung top nearly all of the lists, but there’s a reassuring degree of diversity among the next three, with Motorola still doing OK in the Americas, Nokia-branded HMD appealing to the Middle East and Africa and even Asus getting some success in Eastern Europe.
OnePlus was so pleased with its achievement it even got some more granular data from Counterpoint to use in its own press release. Apparently OnePlus was the third best-selling premium smartphone in Sweden in Q2, fourth in the UK, France, Germany and the Netherlands, and fifth in Italy. That comes as no surprise to us as we found it to represent great value for money even when compared to other premium Android phones.