Did a Global Pandemic Kill the $1,000 Smartphone?
Written by: Dennis Miloseski, Co-Founder, Palm
The economy is crashing, unemployment is at a record high, and retail sales have experienced its steepest drop in decades. As we re-enter a COVID-19 world, the smartphone needs to reshape itself around what consumers need and what they are more likely to afford. Come fall, will people still be scraping together pennies to continue buying the latest and greatest smartphone or will they even be able to make their monthly rent? This self-isolation period has made consumers and even early tech adopters more aware of their needs and has taught them how to connect with less. As consumers begin to prioritize where their dollars are going, the coronavirus may go down as the disease that also infected the mobile industry.
Every year, mobile users are itching to upgrade their smartphone, and the flagship $1,000 smartphone moves front and center and gets a lot of attention, but not everyone needs the most powerful processor, the highest resolution screen, or a phone that is 5G ready. Flagship phones are often littered with multiple cameras, overpriced specs, and an 8K video that even a professional video editor wouldn’t touch. All of these bells and whistles end up costing consumers $1,000 or more on average, and most consumers have bought into the hype of having the latest and greatest tech in our pockets without truly understanding what they actually need and use their phones for.
Although other affordable phones exist, consumers still lack a general understanding of how much smartphone is enough while maintaining all of the things they love to do throughout the day; from streaming music, sending messages, tracking a workout, or communicating with loved ones. As screen sizes got bigger over the years, our smartphones have also turned into supercomputers, oftentimes packing specs and features which go underutilized by many. The industry is also ushering in even more ways to consume through 5G which also drives overall costs up, directly hitting consumers' wallets at a time of financial uncertainty. Although increasing our ability to consume more will open up future benefits, the average consumer will likely underutilize 5G and it isn’t addressing our most critical short-term needs during a time of economic suffering.
Enter the birth of the value premium category. We’ve seen the uptick of premium brand offerings to price-conscious consumers with the introduction of products like the Google Pixel 3a, Samsung Galaxy S10e, and now the iPhone SE 2020. However, price isn’t always everything. Many of these products still follow a one-size-fits-all strategy alienating customers in key market segments.
Most consumers still love the advantages of a small phone. With products similar to the Palm phone, it’s easier to pocket and use with one hand, which is great for being connected without being weighed down - however, they are less immersive for writing long emails or playing games. What we see is that these offerings check some boxes, but it’s up to individuals to prioritize what’s important to them which includes device cost, their monthly plans, understanding what they need and use their smartphone for day over day, and ultimately how a smartphone fits their lifestyle.
Given the state of the current economy, most consumers will not be comfortable dropping four-figures on a smartphone nor pay for features or plans that are non-essential. It’s the perfect time to reprioritize how the $1,000 smartphone fits into our lives - and we finally have some worthy options.