PriceTRAX, from Strategy Analytics, has been used to track smartphone retail price depreciation based on PAYG and unsubsidised prices from more than 105 network operators and retailers across 37 countries. The findings highlight the impact of branding on handset retail values. Stephen Entwistle, vice president of Strategy Analytics, explained the significance of the study, and the salient points it uncovered:
As a product ages, you expect its retail price to fall. In the case of smartphones, this depreciation has been difficult to quantify so we applied PriceTRAX to shed light on the figures.
Smartphones have a retail lifecycle of around two years. By the end of this, most brands have reduced product retail pricing by 34% on average, although there are notable deviations:
Samsung’s S1, Apple’s iPhone 4 and the HTC Wildfire held their pricing well for different reasons.
The S1 demonstrates the advantage of being early to market. As one of the first of the ultra-high-spec “superphones” it was well positioned to hold its price through the early part of its lifecycle due to fewer competitors.
Apple iPhone prices tend not to become discounted due to a tightly managed product branding strategy which focuses on premium smartphones. As a result, depreciation during the first 18 months of the product lifecycle is substantially less compared to competing smartphone handsets. Instead, their value slides by 25% between 22 and 28 months of age. However, iPhones have upheld a clear price differential compared to their counterparts.
The HTC Wildfire shows an extraordinarily low depreciation rate. It was introduced to challenge smartphone prices and has proved to be depreciation resistant compared to others. This is likely to be due to a limited scope to discount low-cost products coupled with its popularity and the acclaim it’s received.
The crop of second generation smartphones such as the Samsung S2, Nokia N8, LG Optimus and BlackBerry Curve 3 8520 have similar price depreciation rates 12–24 months after their launches. These devices hover around average smartphone pricing throughout their lifecycles.
A vendor’s handset portfolio refresh rate will impact the retail value of existing products and this will be the focus of a later study.
Written by Strategy Analytics
Strategy Analytics provides timely and actionable market intelligence focused on opportunities and disruptive forces in the areas of automotive electronics and entertainment, broadband connected home, mobile and wireless intelligent systems and virtual worlds. Headquartered in Boston, MA, with offices in the UK, France, Germany, Japan, S. Korea and China, Strategy Analytics works with clients through annual multi-client services, management team workshops and custom consulting engagements. www.strategyanalytics.com