Why Are Smartphones Getting So Expensive?

[Music] hi welcome to another ColdFusion video so it's clear that high-end mobile phones are slowly becoming more expensive over the years but why in this video we'll take a look at some possible reasons of why on this channel we've already covered the fascinating stories of the very first mobile phone in 1983 and the first smartphone released in 1994 in these videos we saw that the prices were nine thousand two hundred dollars and one thousand eight hundred dollars respectively so what we're witnessing right now isn't the first time that smartphones have been really expensive after the 1990s however mobile phones did fall in price around the world as we enjoyed accessible mobile communication but as the 2000s rolled around our phones began to do more than just communicate and with the extra functionality came higher prices the prices really started to climb when fully capacitive touchscreen smartphones hit the market the original iPhone in 2007 set the bar at $600 and since then the prices of subsequent iPhones and high-end Android devices have steadily been climbing [Applause] he's a chart by Bloomberg of all the popular smartphone prices over the years as you can see there's a clear upward trend but Google's pixel line stands out as great valley that also begs the question are the other top brands overcharging to gain more of a profit possibly to appear stockholders this may be partly true but as you'll see in this video there are other clear reasons as to why the prices are increasing we'll be using mostly Samsung and Apple as examples the Samsung Galaxy Note 8 starts at 930 US Dollars and the iPhone 10 starts at 1,000 u.s. dollars both record-breaking prices unfortunately when you include sales tax foreign exchange rates and trade tariffs the prices can explode the iPhone is 25% higher in Australia 30% more expensive in China 32% more expensive in the UK and 47% more expensive in Hungary where the cheapest version of the iPhone 10 costs 1500 u.s. dollars spending that much money on the lowest configuration of an iPhone is something that the world has never seen before so let's dig right into it here are three reasons for the increases in price reason number one top smartphones are costing more to make the smartphone industry is one of the only sectors where consumers constantly expect innovation and new features every year manufacturers have to overcome space constraints strive to reduce power consumption while providing more features and a better user experience this all doesn't come for free every new innovation demands engineering knowledge testing and calculated design choices a [Music] simple measure of the raw cost of a phone is its bill of materials basically a list of the components and their prices used to create the device here's a chart by Android Authority showing the Bill of Materials for the Galaxy S series over the years as you can see there's an upward trend if we look at the sales prices of the Galaxy S series is the same deal there's an upward trend in both of them but in 2017 something interesting did happen the SI was the most expensive phone to make by far it costed an estimated 307 US dollars to make 43 dollars higher than the s7 and 36 dollars higher than the s7 edge according to Andrew Russ wheeler of H is market quote the higher total biller materials for the galaxy si seems to be part of a trend that reflects something of an arms race and features among Apple Samsung and other phone manufacturers as they all try to add new and distinguishing hardware features end quote so in essence the weapons of this arms race are the phone components and the battle is for your wallet the build materials for the iPhone 10 is said to be 412 dollars also by far the most expensive to get the total cost of manufacturing the phones you need to add in research and development needed for testing new features advertising costs manufacturing costs administrative costs and a pushed outdo their competitor all within a one to two year product's lifecycle taking this into consideration it becomes easy to see how prices can begin to creep up reason number two smartphones are becoming more capable it's obvious that phones are getting more powerful today's top smartphones in some respect have as much grunt as a laptop from just a few years ago in fact the Qualcomm Snapdragon 835 chip which is used in most high-end smartphones by Samsung HTC LG Sony and Nokia is so powerful that it's now being used in full Windows 10 pcs a field normally dominated by Intel and AMD Asus Lenovo and HP have all signed up to use the new mobile chip in their computers this machine is running Windows 10 on a Qualcomm Snapdragon processor you can see this is running 64-bit Windows 10 Enterprise Edition with four gigabytes of RAM I'll pull up the task manager so you can see the full power of the Qualcomm Snapdragon processor with its four cores in action this is Adobe's Photoshop running great on a Qualcomm processor we made zero changes to the app it runs perfectly I'll select a radial blur filter on the ninja cat just to show you that this is real photo shop with all the functionality you would expect another tough performance test on any PC is playing a game here we have the popular Windows 10 game World of Tanks blitz as you can see it runs great super smooth this is pretty remarkable to see as it shows that the convergence between the PC and mobile computing is getting closer than ever before something that I did talk about in some my earliest videos but these new powerful chips comes capabilities for features such as augmented reality and virtual reality all of this as well as new concepts like the iPhones neural engine to help with recognizing speech and images as well as dual camera setups to allow for more options during photos and videos all our incentives for people to pay a higher price for their mobile device these extra capabilities feed into the third reason reason number three supply and demand at the end of the day it all comes down to supply and demand as long as people are willing to pay high prices for mobile power and all of these new features the manufacturers can sell them at these high prices in addition there are numerous studies that have revealed that psychological dependence on smartphones is quite widespread and within that group there's a segment of people that always want up-to-date technology it's just part of their personality nobody actually has to upgrade their phones every one or two years but millions of people do because of this reason high prices can be sustained but the question is if manufacturers keep increasing the price what is the threshold at which the customers say no brand perception also has a part to plan on the demand side if a person is fond of the Apple or Samsung brand they're more likely to see the cost is worth it it's not all bad though there's a growing number of alternative options some of the mid-range phones really aren't that bad anymore the Chinese brand Huawei now the world's second largest smartphone manufacturer can provide much cheaper alternatives the same goes for Xiaomi Google's pixel lineup and Oppo further to this if the goal of your phone is just to get the job done a two year old high-end phone is still decent one final note to take away is that the actual average price of smartphones is actually going down across all of the world except for the United States one interpretation of this data is that although the highest models are going up in price the rest of the market is getting more efficient at sourcing parts and the manufacturing process so they're able to pass those savings on to the consumer as you've seen the high-end models are always trying new things and paving the and innovation is generally expensive in conclusion smartphones have definitely come a long way since 1994 and the capabilities have just exploded over the past decade the cost of having the very best in mobile technology is going up but when we demand so much from our devices it's no surprise so what do you guys think do you agree or disagree with the reasons listed in this video what's the price threshold for you when it comes to buying a new phone anyway that's it I hope you enjoyed this video feel free to subscribe to this channel if you just stumbled across it also I know that some of you have been asking if I have any merch for sale and the answer is now yes but it's only for a limited run for the next 15 days you'll be able to get your hands on some cold fusion clothing in a couple of designs so if you want to help support the channel and get some CF threads the links will be in the description below this has been - gogo you've been watching cold fusion and I'll catch you again soon for the next video cheers guys have a good one are you thinking [Music]

Channel: ColdFusion

Views: 1,249,011

Rating: 4.7917132 out of 5

Keywords: Coldfusion, TV, Dagogo, Altraide, Technology, Apple, Google, Samsung, Facebook, Tesla

Id: 6SbyHukbBZc

Length: 9min 40sec (580 seconds)

Published: Thu Sep 21 2017

Reddit Comments

[u/fernandocole]

Today, in Argentina, an Iphone 7 Plus (32gb) costs u$d1800 to the change.

The minimum salary is arround u$d500.

And if we opt for importing it from other country, we must pay 50% of taxes.

Viva Argentina!

[u/real_sadboi]

Smartphones are more expensive because people are willing to shell out lots of cash for them. Other companies see that Mr. Joe bought that $900/$1000 phone, so they become more willing to charge more for their products. This way, future midrangers will start costing $500+ because it's still cheaper than the competition.

So, while people empty their wallets hyping over the Note 8 or iPhone X, i'll be chilling with a $220 Idol 4S (that has a pretty chill 1440p AMOLED display, along with sick-ass front AND rear-firing stereo speakers).

[u/firelitother]

Because people are willing to pay for it /thread

[u/ozzyymendoza]

We just gotta wait and see if prices will get any higher there is also the chance for prices to go down unless your apple because apple dont give a fuck

[u/Put_It_All_On_Blck]

Flash chips becoming expensive, dual cameras, more sensors, waterproofing, R/D to remove the headphone jack etc. However I still wouldn't buy a $1000 phone.

Didn't watch the video though.

[u/BirdsNoSkill]

I think the plus side of expensive phones is that yes they got expensive but they still drop really fast when it comes to carriers discounting them and buying on the 2nd hand market.

I can't wait until the Note 8 is $400 in like 6 months due to market saturation. The V30 will be sold brand new for $500 when the S9 launches, etc etc.

Its not so bad for the patient buyer because they still drop pretty fast in price. The note 8 is 1k but watch when the iphone x comes out samsung will have a -$400 off like they did with the S8 this summer.

[u/Pixel_Sucks]

This is why I bought a Z Play

[u/[deleted]]

Majority of expensive phones are sold with contracts or with some installment plans, so people do not really care..and think. Especially here in Eastern Europe where in most countries the nation average monthly income does not reach 1000 EUR and at lest one third of the EU countries are still somewhere below 700 you see a lot of people with a new flagship phone every year. People are effectively spending 10%, sometimes even more of their yearly income on a phone. Some can't even afford to pay the service for it and rely on wifi only.

[u/gtr73]

Some valid points in video. But what I don't like - paying a premium for a high end phone that starts to degrade considerably after 2 years.

My Nexus 6P was $999 (AUD) from my carrier, and it has: battery degradation, screen burn in, a faulty microphone and a faulty headphone jack. Not to mention random shutdowns that Google admits is hardware related. At 22 months old, it'll just make it to my 2 year contract finish.

I guess I can live with the current upgrade, might be looking at the same price of $1K, but what about when they start charging $2000 for a high end phone that will probably also last 24 months?

(And I haven't even mentioned lack of software updates if you're not in the Google Pixel family)

I'm sure there's a line when people stop paying for that return on investment.