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Report: 2018 premium smartphone market grew 18%, here's what that could mean
- The premium smartphone market grew by 18 percent last year as compared to the previous.
- The ultra-premium smartphone market is dominated by Apple with 80 percent share.
- This data suggests that consumers are ready to pay more for smartphones, but buy fewer smartphones overall.
Venerable market research organization Counterpoint just published some stats on the premium smartphone market of 2018. According to Counterpoint, the premium smartphone market grew by 18 percent last year as compared to the previous.
This is especially notable when you consider that, in the same report, Counterpoint says the overall smartphone market declined by about three percent.
For clarity, Counterpoint groups smartphones into three categories based on wholesale pricing (i.e. not retail pricing): budget (<$200), mid-range ($200-$400), and premium (>$400). Thus, the 18 percent figure refers to all phones with wholesale pricing at $400 or more.
Refer to this chart below to see how the data looks:
Additionally, within the premium category, Counterpoint breaks that down into sub-categories: affordable premium ($400-$600), standard premium ($600-$800), and ultra-premium ($800+).
The ultra-premium segment is dominated by Apple, with over 80 percent of that market. This is due to the high prices of its Apple iPhone X, XS, and XS Max smartphones. The other 20 percent is dominated by Samsung, specifically the Samsung Galaxy Note 9, with a smattering of other phones thrown in (such as the Google Pixel 3 XL).
In fact, Apple dominates 51 percent of the entire premium segment (>$400) altogether, with Samsung owning about 22 percent, followed by Huawei at 10 percent. The final 17 percent is made up of various manufacturers, most of them Chinese (Xiaomi, Oppo, Vivo, OnePlus).
It should be noted that OnePlus is making serious gains in the affordable premium category ($400-$600). Although Apple still dominates the affordable premium segment, OnePlus’ success around the world — most notably in India — makes it the fastest-growing OEM in the premium segment.
What does all this data mean?
What does all this mean for you, smartphone consumer? It means that consumers are willing to spend more money on their smartphones, which is why we are seeing more and more devices with a retail price near (or even above) the $1,000 mark. However, the three percent drop in the overall market also means that people are buying fewer smartphones.
In other words, we are OK with spending a lot of money on a phone, but we won’t be buying one every two years like the industry has expected us to over the past decade.
With that in mind, the industry as a whole is likely to start trying to convince consumers in developed nations that an “affordable premium” smartphone is our cheapest option. That’s why the iPhone XR is priced “affordably” at over $700, and we expect similar pricing for the upcoming Samsung Galaxy S10. Meanwhile, in developing nations like India and China, smartphone pricing will be more in the mid-range category with retail prices below $600, and in emerging markets like Africa, smartphones will fall squarely in the budget category.
We are OK with spending a lot of money on a smartphone, but we'll be buying them less frequently.
Ultimately, this data suggests that the smartphone industry’s plans are working, in that we are all OK with spending way more on a smartphone than we would have five years ago. What we have yet to see is whether or not this strategy will pay off in the long run. Weak sales figures from Apple and Samsung suggest one of two things: the plan isn’t working or the plan is going through some growing pains as it settles in.
What do you think? Are you glad that there will be plenty of high-end options for smartphones coming in the future for you to buy once and hold onto for a long time, or were you a bigger fan of paying less for a phone but buying them more often? Let us know in the comments.