The Year of the $400 Phone
If there is something that I love about the car industry, it is that there is a sense of reality to buyers. An understanding of what a customer needs creates a sense of nuance with the way that auto manufacturers position their lineups. Take Toyota for instance. Toyota happens to own Lexus, a luxury car brand. But the car you think of the most when you think of Toyota is probably the Camry or Corolla, not so much the Lexus GS or LS. Most drivers realize that while there are some nice things about a Lexus, a Camry or Corolla is a better fit based on value for the dollar. Many car buyers are simply looking for a solution to commute from home to work/school. The vast majority of people care about fuel efficiency not so much about engine horsepower. Car companies understand this, and this is why they market different types of lineups in different ways. What they don’t do, however, is suggest that everyone needs to buy the best car possible regardless of use case.
An industry that doesn’t follow this model at all is the smartphone industry. Companies like Samsung and Apple traditionally have marketed the best possible phones that they have to offer regardless of customer needs. Companies make lower-cost devices and sell a lot of them but never really market them as much as their flagships. Consider Samsung and the way that they market their devices. Currently, the device that gets the most marketing from the company is its very premium-priced Galaxy S20 Ultra. This would be akin to Toyota exclusively marketing the LS instead of the Camry. In 2020 though, the tide is starting to shift and there is a race at the $400 price point, making the price point where most people will buy phones finally being given the attention that they deserve. 2020 is the year of the $400 phone.
The Economy Class is the Standard
Years ago, the reality in smartphones was that any sort of less expensive option was to be dismissed. It was unworthy of anyone’s money, that is how bad the experience was. This reality started to change around the time that Motorola released the original Moto G in 2013. The impact of this device is often understated, but it was the beginning of the path of midrange phones into an acceptable status. The Moto G showed that a lower cost device when executed properly can deliver the core smartphone experience without having to pay top dollar. This experience entailed a reliable communicator, with a decent screen and serviceable camera that is reliable day in and day out.
As time has passed, there have been numerous innovations in the high end that have eventually come down into the midrange. What has happened in recent years, however, is a growing sense that the innovations needed by most people are more than fulfilled by midrange and budget options. This growing reality makes most people’s need for an expensive flagship device is rather unnecessary. Upon further thinking, the “innovations” of flagship phones typically revolve around camera performance and hardware design. Which camera is more impressive with that year’s niche feature. Advancements such as ultrawide, telephoto, and macro lenses are great marketing opportunities but ignore the fact that most people just pull out their phones and point and shoot. The hardware design that we see on flagships continue to put a focus on an all-screen experience since there is nothing left to enhance or take away until folding displays become more mainstream and accessible.
These new features that are being pushed yearly, unsurprisingly have driven up the cost of flagship phones to well over $1000. $1000 for features that most people will never use. Consider some of the features that are being emphasized in the aforementioned Galaxy S20 Ultra. 100x “Space Zoom”, reverse wireless charging, and screen to body ratio. All things that do not mesh with the reliability that people are looking for in their smartphones. There is a feeling of being out of touch with the bulk of consumers. Coincidentally, Samsung happens to also make the Galaxy A51. A smartphone that handles all of the basics very well for a price of $400, a device that speaks much more to most consumers and will be bought in much higher volume.
This $400 price tier is fast becoming the economic sector of the smartphone market. Phones that are built to handle all the communication tools that we utilize today, while also being adept at being able to post photos and videos to social media apps and also handle some light mobile gaming. Flagships, by contrast, are very much luxury items that are powerful enough to be able to replace many laptop functions at this point. The only thing that has been missing is viable options in the $400 price range. With a trio of devices in the Samsung Galaxy A51, iPhone SE, and Google Pixel 4a the options are now available.
The Utility of the $400 Phone
When Apple officially released the new iPhone SE, many tech reviewers laughed at it and suggested that the design was ancient with a front-facing hardware fingerprint sensor and large bezels on the top and bottom. A similar complaint was made of last year’s Pixel 3a. The reality of the situation is that most people do not care about bezels, or if a phone is made of plastic as the 3a and A51 are. The SE and Pixel use hardware fingerprint authentication, which can be argued are better and more reliable than 2D facial recognition or in-screen fingerprint sensors.
There is certain usefulness of an older technology that people are comfortable with. Being on the bleeding edge generally means dealing with buggy features that have yet to be refined. Being on this bleeding edge means living through the growing pains of new technology. This is not an issue in the midrange, where maximizing costs is crucial in the decision making process. Using a bit of tech that has been in production for a long time means that there doesn’t need to be extensive research and development costs to implement it. This keeps the cost down and the experience familiar and effective.
Consider the fact if you are a loyal iPhone user. You have the iPhone 7 and it is getting a little old. You go to a carrier store and see that there is the iPhone SE for $399, which largely functions just like your iPhone but has brand new internals. Then you see the iPhone 11 and 11 Pro, which are much more expensive at $699 and $999 respectively, but also very foreign in the way that they operate versus the tried and true iPhone 7. There is an appeal for this person to stay with what they know and also save $300 in the process. On the flip side of that, take the example of the Pixel 3a. The proposition of that phone was simple, all the great things that people liked about the Pixel 3 (camera performance, smooth software, little extra apps) in a more affordable package. These two phones deliver on the core experiences that Google and Apple care about, and do it well.
When the Pixel 4a is released, customers looking for a new Pixel device will be given an ultimatum when looking at it versus the flagship Pixel 4. Is the inclusion of facial unlock biometrics, a higher refresh rate display, and an additional camera lens worth the extra $200–400? For most, the answer will likely be no, and that is what makes the $400 price tier so important. Delivering a quality experience that nails the basics of smartphone use is what most people seek and should purchase.
The Coverage Problem
One of the often unheralded issues around the exposure of midrange devices is a lack of coverage and awareness from outlets that cover and review phones. A lot of people read reviews of products before they buy them, but the issue with phones is that there is not enough coverage placed on the midrange and entry-level smartphones. Every YouTuber and tech blog has wall to wall coverage of the new flagship device from Samsung or LG, but not many will cover the Galaxy A series or the LG Stylo series. This lack of interest from content creators shows the companies that maybe people do not care about these products as much.
This focus on the high end creates an impression that lower-end phones don’t matter and that money should be spent on a flagship instead. This has all changed with the Pixel A series and the iPhone SE. When these companies release a new phone, people take notice. As a result, there have been many reviews and walkthroughs of these devices, showing people looking into reviews that there is an option that will work without costing $1000.
The frank reality of things is that smartphones have likely peaked. Customers are looking to replace their existing smartphone as opposed to being in the market for their first smartphone. There is a feeling of commoditization with smartphones now in 2020. Most people should probably buy a midrange phone instead of a flagship mainly because they use tried and true methods as opposed to the experimental features that are being thrown into flagships to make them more interesting.
A perfect example of this is Motorola. The company recently took the wraps off of two new phones here in the US: the Moto Edge+ and the Moto G Stylus. Two phones on opposite ends of the pricing spectrum ($1000 for the Edge+ and $300 for the G Stylus). Based on quite a few reviews, the Edge+ is impressive but is also riddled with usability issues. The G Stylus, by contrast, has been a pleasant surprise at $300 and shown itself to be a rather capable device. The smart money, if you are a Moto fan, is probably to buy the G Stylus or even the Moto Z4 at $500 as opposed to exciting but flawed gimmicks of the Edge+. And this is the state of many flagships versus their midrange counterparts in 2020.
Considering all the brands that are available to us right now consider this. There is tremendous value in phones such as the iPhone SE, Google Pixel 3a, Samsung Galaxy A51, Nokia 7.2, Motorola Z4, Motorola G Stylus, and LG Stylo 5. All phones that cost under $500 brand new that in many ways might be more reliable than their higher-end counterparts. This year is the year of the midrange phone, specifically the $400 phone. Flagships have become luxury cars, the Lexus in the sea of Toyotas. There is no shame in owning a Camry instead of Lexus ES, isn’t it time that we started to look at our smartphone buying habits the same way?
