Apple And Samsung Are Struggling To Sell Ultra-Premium Phones

In the past few years, smartphone makers, with Apple and Samsung at the forefront, have been raising prices along with the growth of the smartphone market. However, consumers are pushing back. According to new data, the competition in the ultra-premium segment is getting more intense.

This week Samsung and Apple reported their Q2 earnings and the figures don’t look very optimistic for the high-end tier. Regarding Apple, there was a decrease of 12% in iPhone sales compared with 2018 while the overall net income experienced a 13% drop. It is believed by analysts that the more affordable iPhone XR has become more popular than the iPhone XS, and XS Max, which are priced at Rs 52,180, Rs 69,597, and Rs 76,563 respectively. In addition, consumers are waiting for the iPhone 11 so they’re not buying new phones for now.

In the case of Samsung, its handset sales went up by 7% in general, reaching $20 billion, and occupied a larger market share of 22%, as reported by Strategy Analytics. However, the majority of its sales come from the mid-range A-Series phones. In comparison with one year ago, the company now gains 42% less profit. Furthermore, the revenue from the Galaxy S lineup fell due to lơ sales of the S10 as well as stagnant demand for high-end offerings.

These results are no surprise though as phones are more expensive and people are slower in upgrading their devices. For example, it now takes US consumers three years to get a new model instead of two years. Besides, people can now count on software updates while there are not many changes in the hardware design of new models. In addition to that, cheaper phones are getting more flagship features.

That cannot please a lot of people. Analyst Carolina Milanesi from Creative Strategies.

Cheaper phones for the win

Phones, in general, are becoming more costly, but that does not mean we are going along. Samsung and Apple are seeing more people buying their less expensive flagship phones.

While the XR can be considered the best iPhone for its price with most of the XS’ feature for thousands of rupees less, the Galaxy S10E can be compared with a dream come true to those with interest in small phones.

These are the cheapest offerings from the companies’ flagship lineups and are now popular among buyers. As stated by Canalys, the iPhone XR is the only good thing in Apple’s iPhone sales in Q2. By the firm’s estimation, the handset made up around 38% of the company’s May shipments. According to Apple Chief Executive Officer Tim Cook, the firm financing and in-store trade-in programs.

Samsung, on the other hand, gets most buyer’s attention for its Galaxy A lineup. The company noted that there was an increase in its total smartphone shipments between Q1 and Q2 thanks to strong sales of Galaxy A phones, which include the A70 and A50.

Many of them carry similar features to those in Samsung higher-end phones, with some characteristics even the Note and Galaxy S line don’t have. For instance, the Galaxy A50, at Rs 24,383, offers three rear cameras and a 6.4-inch screen. The Galaxy S10 Plus, with the same features, costs at least Rs 69,666.

As of now, the Galaxy A80 is the only Samsung smartphone to house a pop-up, rotating camera. The phone has only one camera array which flips around automatically when toggle into selfie mode, including a 48MP main lens, an 8MP ultrawide lens, and a TOF (time-of-flight) sensor for facial recognition.

Additionally, the handset houses an intelligent battery that learns the user’s daily routine as well as their app usage patterns for optimizing the power consumption. While this kind of camera hasn’t come to any other phone, the Galaxy S10 does have a smart battery.

Next week, Samsung will unveil its Galaxy Note 10, which isn’t anticipated to bring about much innovation from its predecessor. However, it should please its fans. There aren’t any details on the phone’s price and features, but it won’t likely sport a pop-up camera.

Apart from that, the Korean phone maker will finally launch the Galaxy Fold this September after fixing problems with its screen. The company will also boost its 5G phone lineup with the aim of taking the lead in such a new market.

Though none of these upcoming phones will be cheap, Samsung is betting on them to revitalize its phone sales. However, cheaper phones may still be the winner.

Canalys noted that the A80, A10, and other new phones made up half of Samsung's phone shipments in the second quarter. And these phones may determine the volume growth for the company of the rest of 2019.