High-End Smartphone Boom On The Decline

July 23rd, 2013 at 2:13 am
 


High-end smartphones like the iPhone have paved the way for the market segment to thrive and become popular among consumers. For the first time, consumers have a way to surf the Web and use a wide range of applications on their smartphone. It was an exciting new way of using a mobile phone. As a result, it also created revenue in the billions for Apple for several years.

The new technology certainly did very well on both the consumer and Apple. Despite the steep pricing for the device, people still wanted to have it. The iPhone became the epitome of what a good high-end smartphone should be. It was not long before the competition came to imitate the iPhone formula.

Fast forward to the present, people now have a wide selection of high-end smartphones to choose from. The likes of Samsung, HTC, Blackberry and others have come up with their very own high-end devices that are just as appealing and attractive to consumers. While this may be good for the general consumer, it may not bode well for the high-end smartphone market. Gone are the days when the market was a source of income for Apple. Although it still brings in much of the revenue for the company, the saturated market is already experiencing the decline. The availability and the competition may have affected it, along with the slow economy.

An indicator of this decline is evident in the price cuts for high-end smartphones today. According to market research firm IDC, the average price for a high-end smartphone has gone down from $450 to $375 beginning in 2012. The price drop particularly had an effect on Apple earnings with their iPhone product line. Other smartphones also had to go with price cuts to make their devices attractive to customers. There are also low-priced mobile phones with advanced features now available in the market that further challenged the high-end smartphone spectrum.

The price decline that the high-end smartphone is experiencing also happened previously to the PC market. In the beginning, home computers were once considered as a luxury and only few people can afford them at the steep price point when they were first introduced.  But as more and more people wanted to go online and the demand grew, computer makers introduced cheaper desktop PC versions that consumers gobbled up. This led to the gradual decline in PC prices over the years.

It seems that the same thing is currently happening to Apple. The company that started popularity of the high-end smartphone may already be feeling the pinch of the declining prices of their products to stay competitive. The lower prices affect the profitability of the company considerably. In the process, sales and revenue estimates in the coming months are gradually declining. For the first time in a very long time, Apple share prices have gradually dropped based on the slowing iPhone sales and declining margins. The same thing is happening for other high-end smartphone makers all over the world. It may signal the decline of the high-end smartphone. But it may just be a natural progression (or depression) in a market that has enjoyed immense success and profitability for several years. Who knows, it might also usher in the entrance of newer high-end products that will capture the imaginations of consumers anew.

 

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