Why expensive smartphones?

In our time it is difficult to surprise someone with the price of a smartphone in excess of a thousand dollars. We’ll just say that it’s the flagship, and it can cost so much. But that’s why the price grow so much? No, it is not only the exchange rates. There are a few other reasons.

The first iPhone came out, it was not worth 500 dollars, although he was really a revolution and something truly groundbreaking. Then the users did not know what device communication you can pay over a thousand dollars.

In those days, the Samsung is built on the fact that iPhone is very expensive, and should not much is. In the end we have ceramic Galaxy S10 for 125,000 rubles, and it’s little surprises.

Nowadays, smartphone has become something truly irreplaceable. That is why people are willing to pay more for it.

Buying a smartphone, we’re not just buying the phone as it was before. In one box we get a camera, office tools, Bank cards, store information and much more. It used to sound like advertising slogans. Now it is really so, and the smartphone can replace a lot. We stopped going to the Bank, stand in line in the cinemas and go to the sites to buy a train ticket or plane.

Despite the indispensability of smartphones, the manufacturer has to implement in the design of new solutions, and all this costs extra money.

The cost

It is necessary to dwell on those stories, when after the release of a new smartphone, people begin to discuss its cost, a little confusing concepts. The reason for that article, which referred to the cost of the flagships, part of 300-350 dollars. Then everyone starts to ask questions, why is it worth $ 1,000.

Not everyone understands what the costs and confuse it with how much companies spend on the production of an already developed mobile. As a rule, the figures that are given, it is only the cost of the components that make up the smartphone.

For example, Apple in 2018 spent on research and development (R & d) of more than $ 14 billion. Of course, the money spent on all products, but that they should “discourage” selling your device.

In addition, there are also costs of Assembly, culling, packing, delivery, the maintenance of retail stores, paying employees, advertising, and more. All these expenses should be offset and, thus, to make a profit.

Next is the user is offered a choice, he can buy or not to buy this smartphone.

Why smartphones are expensive?

Smartphones have not only given people the services, but also replaced a huge number of gadgets. A simple example: people stopped buying the camera. Of course, not counting the serious DSLRs or sistemnika, which are necessary for the hobby.

This in itself allows the manufacturers to raise the price with each new generation of smartphones, promising users all new and new opportunities, often colorfully portrayed, but in fact are naked marketing. Often, the difference between the previous and subsequent generations to be called “substantial” language does not turn.

Another point that affects the cost of a smartphone is competition. It would seem that it should reduce the cost, but in this industry things do not work out so logically. This mainly applies to top-end devices, which are a strange symbiosis of indispensability and a certain level of “showing off”.

Manufacturers of smartphones in the budget segment, trying to offer the user a relatively good performance for little money. In the end, companies compete in cost down.

Largely companies reaching for the Apple. When a new iPhone, Apple can ask for almost any money, as it will still buy. Other companies, even if they can make the price lower, this makes no sense. At higher margin it will still buy, and companies will get more profit. So they adjust to each other.

But do not think that the increase in value is solely a cheat. Nowadays technologies develop so fast and not require large investments. But this is not a major factor in the increasing cost of smartphones. They are all important in the bundle. Even the fact that the culling on the production of smartphones, which are trying to surprise their appearance or characteristics, is also growing and requires money.

The results

Summarizing, we can note some main factors increasing the cost:

  • the indispensability of smart phones
  • the race for the leader of the cost
  • the increase in the cost of development

In the end we have what we have. It is not excluded that further the cost will only grow, and this is not the case when the emergence of competitors able to bring down the cost of the flagships. A good example is OnePlus, which was cheap and worked like a flagship, but as it turned out in the end, you just gained himself a fan base, and now is comparable with the top smartphones from other manufacturers.

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