Enlarge / The Samsung Galaxy Note10.
We've already seen signs of American consumers sticking to their smartphones for longer than before. This presents challenges for companies such as Apple and Samsung, for whom mobile phone sales are ultimately important. A new NPD report reiterates this point, adding, however, that less than 10 percent of American smartphone buyers spend more than $ 1,000 and flagship cell phones like the iPhone 11 Pro and the Samsung Galaxy Note10, which attract the most attention Attract marketers and media, effectively exclude] However, the main concern of the NPD report is the adoption of 5G. 5G phones may initially be prohibitive for many consumers, with the first wave of 5G phones in 2020 likely to cost at least $ 1,000 in most cases. On the other hand, consumer awareness of the impending introduction of 5G is high and many consumers said that the upcoming changes are one reason they continue to spend a lot of money on new phones. However, some consumers who can afford $ 1000 for cell phones, but have not, will do so when 5G arrives, provided it has all the advantages that marketers have taken advantage of. (However, this will vary greatly depending on the city and region.)
In terms of cities and regions, the report also found notable differences in the purchasing habits of smartphones in various designated market areas (DMAs). For example, the NPD claims that Americans in major cities such as New York City or Los Angeles are more likely to spend $ 1,000 or more on a smartphone. It is unclear from the data whether this is due to comparatively high average incomes in these areas or to other factors.
In any case, the NPD recommends that smartphone makers concentrate their marketing budgets on these DMAs for these types of phones, especially as the 5G era approaches.
Write what you know
This is a speculation on my part, but this geographical disparity may partly explain why flagship phones receive significantly more media coverage than other phones. Most media workers are in such cities.
However, the lack of media coverage of these lower market phones is not so surprising at first. There is not much interesting to say to press or influencers about phones that use two or three year old technologies that work just fine enough for most people's needs, but that do not cause waves or innovation. And some companies, such as Apple, offer lower-priced phones, which used to be high-priced flagships, so they've been extensively covered in their heyday.
All these reports about the United States say nothing about the developing countries, which are still the largest potential growth markets for mobile phones, because the markets in developed countries are so saturated. Even less likely, consumers in emerging markets spend $ 1,000 or more on a smartphone.
There are Android phones that are far below the price recommended by Ars, and Apple's iPhone 8 still costs about $ 500. It's likely that Apple will be able to launch a phone that lowers the price even further to target markets outside the big cities in rich economies. However, as we noted in some of our reviews, the support infrastructure for iPhones (Apple stores and the like) is often relatively inadequate in small cities or in many countries.
Recently there has been much discussion among economists and politicians about a gap in the US economy between affluent cities and the rest of the country. Ironically, this NPD gadget report provides clues that at least partially support this diagnosis.