For several years now, the standard price for a high-end smartphone was $200 with contract. Recently, however, several models have debuted at $300, and more are coming soon, signaling the end of what used to be a hard-and-fast rule.
A History Lesson
The origin of the $200 price barrier can be traced to the iPhone 3G — Apple’s second-generation handset debuted at this cost back on 2008. The company has held firm with this price ever since, and now many people take it for granted.
If you want to understand what a change of pace the iPhone 3G set back then, consider this: way back in 2003 was the debut of the Treo 600, a device that helped shape what smartphones would be for years to come. It cost $450 with a contract from Sprint, and that was a fairly typical price for years. Certainly no smartphones launched at $200.
To give yo an idea of the situation back in those days, smartphones were so expensive that when Apple introduced its very first one in 2007, the company priced it $600. You didn’t read that wrong… when the initial iPhone debuted it cost $600 with a two-year contract from AT&T. A few months later this price dropped to $400 with contract, but I know consumers today would still be shocked by that second price.
A Whole New World
The launch of the second smartphone from Apple took a different course. Rather than asking people to pay a premium for the iPhone, this company undercut all its rivals.
You might consider this one of Apple’s more brilliant moves because it totally changed the entire smartphone market. Instead of these being a niche devices that only people with big pocketbooks could afford, the $200 price put them into the reach of anyone who really wanted one.
Only because of this change do we have the smartphone market of today. According to market-research firm IDC, there were just over 100 million of these devices shipped globally just during the second quarter of this year. That is a number that would have been considered a pipe dream in 2003.
Time Marches On
As successful at the $200 price has been, it couldn’t hold forever. If nothing else, the force of inflation has been pushing on it for 3 years now.
I have expected prices to break through this barrier for some time now. What I wasn’t expecting is how much the jump would be. I was sure that at some point high-end smartphones would go up to $225. Instead, a number of models jumped up a whopping 50% to $300 with a two-year service contract.
Some of these models might remotely be able to justify this price. The Motorola Droid Bionic is one of the most powerful smartphones ever released, and I can see someone making a case for it costing $300.
But that’s not true of the BlackBerry Bold 9930. While this is RIM’s best model ever, weaknesses in the BlackBerry OS make this handset less useful than many of its rivals in a number of areas. Its high price tag is completely unreasonable.
That’s not to say that some models haven’t been a bit more modest. T-Mobile’s version of the Samsung Galaxy S II will cost $230 with contract, a price that I believe is perfectly justifiable, even if Sprint’s version is going to cost less.
The Bottom Line
What it comes down to is inflation. If $200 was a reasonable price to pay for a smartphone in 2008, then asking someone to pay 10% or 15% more three years later is also reasonable.
So be prepared, there’s a good chance your next smartphone is going to cost more than $200 with a two-year contract. Don’t be shocked — be grateful device prices were at or below that mark for as long as they were.
Ed Hardy has been Site Editor for Brighthand since 2002, and has been covering the mobile industry for over ten years, starting out with PDAs and transitioning to smartphones and tablets. He lives in Atlanta with his family and an undetermined number of cats.