Why are the prices on smartphones growing?

Why the price of smartphones is getting higher? In 2012, Russia’s flagship device can be purchased for 30 thousand rubles. Now this figure can reach up to 127 thousand rubles. Of course, for 20-30 thousand rubles consumers can still buy devices on the flagship CPU, but a powerful processor is not the only symptom flagship device, and Poco F1 can hardly be called a flagship is a device with strong compromises. And Yes, we are not talking about premium devices with expensive materials. The growth of prices is influenced by many factors, we consider only the most obvious. But I have to say to expect to reduce the cost of smartphones in the future is not worth it.

Inflation

The main reason for the rising prices of smartphones, I would call inflation. And it’s not just about the hyperinflation in Russia, it is also about global inflation. For example, in the United States each year inflation is 2-3%, and this is the absolute norm, a little inflation is a sign of a healthy economy.

If you make small payments, it is possible to understand that the smartphone which in 2007 was worth $ 500 in 2019 in the US will cost 634 USD due to the annual 2% inflation, which is applied each time a new price. That is why, for example, OnePlus 6 is not $ 300, as the first OnePlus and $ 520. Of course, it plays a role, and the policy itself OnePlus, but more on that later.

Dumping

Dumping— selling of goods and services at artificially low prices. Dumping prices significantly below market prices and sometimes even lower than the cost of the goods or services.

Very often Chinese manufacturers are dumping prices of their devices to get the recognition of consumers and fan base. A good example is the OnePlus and Xiaomi. OnePlus One was $ 300, when the flagship was valued at $ 600. The company are dumping prices in order to attract customers. Even if you consider inflation, the cost of smartphones OnePlus can’t every year be increased 30-50 dollars. It is rather the policy of the company, gaining customer base now OnePlus can every year slightly increase the cost of new devices, customers do not notice a big difference, and while sales remain high.

Good example is Xiaomi, which introduced a new brand Pocophone, adapted for sale all over the world. The first unit was Poco F1 with flagship hardware, but at the price of 20 thousand rubles. It is also a good example of dumping. The new brand needed a base of customers, an effective way is dumping. However, the Golden age always comes to an end, Finance Xiaomi is not infinite, and gaps need to be filled with something, this will entail in the future rising prices.

New opportunities

The last main reason I would say that the desire of manufacturers to give consumers the maximum capacity. In comparison with 2012 smartphones today have much more possibilities. New modules 3D facial scan, a fingerprint scanner below the display, the unique shapes of the buildings and displays, special gradient colour, artificial intelligence — all this dramatically increases the cost of smartphones.

In my opinion, these 3 reasons are key to increasing the cost of smartphones, so if before $ 600 was the norm, today the figure is $ 1,000, and to expect reduction of prices on a flagship model is not necessary, as will soon get the popularity of the folding apparatus, the production of which is significantly more expensive.

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