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The $2000 smartphone isn’t sustainable

The long-standing counterpoint to accusations of phone prices getting out of hand is the fact that the vast majority of people, especially in the US, finance their phones on monthly payment over two years. That makes a $1000 phone marginally more expensive on a monthly basis than a $700 one, and a $1400 one marginally more expensive on a monthly basis than a $1000 one. Or so the thinking goes. While I do agree with the basic premise here—that consumers are frogs in a slowly boiling pot when it comes to phone price hikes—I do so only to a point, because I think there is a point at which this model fails. And I think it is one that is rapidly approaching. While Samsung’s $1400 S20 Ultra is a strong $600 shout away from $2000, last year’s Galaxy Fold brushed right up against it. Clearly, Samsung is flirting with the idea of a $2,000 smartphone, and I suspect the Fold’s successor will run perilously close to that mark as well. And a $2,000 phone, even financed over 2 years, would cost more per month than typical postpaid phone service in the US. You’re going to notice that on your bill… More here.

I think the lack of longevity is one reason why there must be a ceiling on smartphone prices and COVID-19 will without doubt be a stronger downward force in the short term.

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