[Tech Talk Note] One smartphone costs 3 million won... Why are Samsung and Apple upgrading their products?

Samsung pushes for additional ‘Pro’, Apple releases foldable… Targeting the premium market

Sales increase even though shipments decrease... Consumer burden variable due to increase in average selling price

(Seoul = Yonhap News) Reporter Park Hyeong-bin = Smartphone manufacturers are trying to secure profitability by raising product prices and segmenting premium lineups.

As the growth of the global smartphone market has stagnated and it has become difficult to increase sales just by increasing sales, the company is trying to respond to market changes by increasing the average selling price (ASP).

Samsung Electronics [005930] plans to segment its existing flagship lineup, and Apple plans to target the high-priced market by adjusting the launch period of foldable products.

As we approach the era where a single smartphone carries a price tag exceeding 2 to 3 million won, manufacturers' premium strategies are also entering a new phase.

◇ Samsung ‘Pro’ added, Apple ‘3 million won foldable’… Targeting the high-end market

According to the industry on the 17th, Samsung Electronics plans to add a 'Pro' model to the Galaxy S27 series next year.

Currently, the Galaxy S series consists of the basic model, plus, and ultra. Although Ultra's price and specifications are burdensome, it is a new option for consumers who want higher performance than the basic model.

This can be interpreted as a strategy to expand premium demand by creating a new price range among existing product lines.

This is because you can secure the opportunity to sell products at a higher price range without raising the prices of all products at once.

Apple chose a strategy of raising the upper end of the price range through the foldable phone 'iPhone Duo'.

This product, which costs more than 3 million won for the basic capacity model, is aimed at consumers who are willing to pay a high price with a new form factor and user experience.

It is also worth noting that the Pro model was introduced before the standard model and the release of the standard model was postponed to the first half of next year.

This can be interpreted as a strategy to break away from the usual practice of releasing standard and pro models together and launch high-priced products first and then expand demand to products with relatively lower prices.

By concentrating initial production capabilities on high-end products, the supply of products with relatively high selling prices can be prioritized during the period of high demand immediately after the launch of a new product.

◇ Even though sales volume decreases, sales increase… Consumer burden variable in premium strategy

This strategy is coupled with structural changes in the global smartphone market.

As the market has reached maturity and it has become difficult to increase shipments, strategies to increase product composition and average selling price have become important.

According to market research firm Counterpoint Research, in the second quarter of this year, shipments in the global smartphone market decreased compared to the same period last year, but sales increased by 7%. This is due to the average selling price (ASP) rising 17% to $400.

Even in a situation where the number of units sold has decreased, market sales have increased as the selling price per unit has risen.

On the other hand, for mid- to low-priced product lines, the burden may increase because it is difficult to reflect the cost increase in the selling price.

When the price of memory semiconductors rises, production costs increase, but in the low-price market, where there are many price-sensitive consumers, a decrease in demand due to price increases must be considered.

Chinese manufacturers that operate a wide range of mid- to low-priced products, such as Xiaomi, Oppo, and Vivo, have been hit hard, and Samsung Electronics, which is also a major seller of mid- to low-priced products such as the Galaxy A series, is also not free from the cost burden.

The industry says that the success or failure of a premium strategy depends on whether it provides differentiated value that is worth the additional cost to consumers rather than the price increase itself.

This means that even if a higher price range is presented due to lineup segmentation or form factor changes, it is difficult to expect increased demand if consumers do not feel the same amount of utility.

An industry official said, "Focusing on high-priced products is a choice to overcome the limitations of market growth. It is important to be able to persuade consumers with unique features and experiences, but there is also a risk of escaping the 'psychological limit' of price."