Are you ready for $1,000 smart­phones?

Pre­mium fea­tures on high-end de­vices add to pro­duc­tion costs

USA TODAY US Edition - - MONEY - Ed­ward C. Baig and Eli Blu­men­thal

Will you need to take out a mort­gage to pur­chase your next smart­phone?

OK, that’s an ex­ag­ger­a­tion. But with a new iPhone 8 ex­pected to crack the $1,000 price bar­rier when it goes on sale (most likely) next month, it is worth ask­ing what kind of deep pock­ets buy­ers need to have.

In­deed, the price for Ap­ple’s 10th-an­niver­sary iPhone could con­ceiv­ably go much higher than a grand, es­pe­cially if sup­plies are con­strained.

“A $1,000 iPhone would be test­ing the lim­its of what con­sumers are will­ing to pay,” says

Neil Maw­ston, ex­ec­u­tive director for the global wire­less prac­tice at Strat­egy An­a­lyt­ics in Lon­don. “$1,000 is more than what many peo­ple pay for a new tele­vi­sion.”

Of course, you al­ready came close to spend­ing that much last year if you pur­chased the iPhone 7 Plus and maxed out on stor­age.

It’s not just Ap­ple. The up-

com­ing Galaxy Note 8 that Sam­sung re­cently an­nounced will cost be­tween $930 and $960 when it comes out next month (de­pend­ing on car­rier). And there’s no word yet on how much the soon-to-launch LG V30 smart­phone will cost.

Some of the higher cost has to do with pre­mium fea­tures. The V30 will sport the kind of pricey edge-to-edge OLED dis­play we may see on the iPhone 8, and, in fact, LG could be a sup­plier of just such a screen on the iPhone.

As the bat­tle among high-end de­vices in­ten­si­fies, man­u­fac­tur­ers are hav­ing to in­vest in flashier fea­tures to make their prod­ucts stand out. Edge-to-edge dis­plays, wa­ter re­sis­tance, iris scan­ning and dual cam­eras are be­com­ing more com­mon, but they also add to the cost of man­u­fac­tur­ing.

“Smart­phones have not be­come com­modi­ties, and, in a ma­tur­ing market, it is healthy to see seg­ments will­ing to pay more for higher end fea­tures, ma­te­ri­als and de­sign,” says Avi Green­gart, the re­search director for con­sumer plat­forms and de­vices at Glob­alData.

For in­stance, con­sumers who need to have a phone hyped as the world’s first “holo­graphic me­dia ma­chine” must be ready to pay at least $1,200 for the Hy­dro- gen phone, a yet-to-be re­leased de­vice promised from high-end­cam­era maker Red.

Green­gart points out that there are bar­gains to be had. Chi­nese smart­phone man­u­fac­turer OnePlus, for ex­am­ple, sells phones with ro­bust specs, in­clud­ing the same Qual­comm pro­ces­sor as the Note 8, at prices start­ing at $479.

For all the pub­lic­ity sur­round­ing $1,000 smart­phones, the av­er­age sell­ing price for pre­mium smart­phones lately ac­tu­ally has fallen slightly or re­mained rel­a­tively flat world­wide, ac­cord­ing to re­searcher Gart­ner. In the first quar­ter of 2017, av­er­age prices in the pre­mium seg­ment (the high­est-end smart­phones) were $460, com­pared to $482 dur­ing the same pe­riod a year ear­lier.

How we pay for phones has cer­tainly changed over the past cou­ple of years — and so the sticker shock is more ap­par­ent. The norm used to be to pay up front for a phone that was sub­si­dized at a some­what re­duced price by your wire­less car­rier, typ­i­cally tied to a two-year con­trac­tual obli­ga­tion. That is how a

$649 iPhone could be listed at

$199.

While an iPhone 8 al­most cer­tainly is go­ing to com­mand top dol­lar, some an­a­lysts ex­pect the phone to fly off of shelves. There’s pent-up de­mand for the phone, which may boast such miss­ing iPhone fea­tures as wire­less charg­ing and fa­cial un­lock­ing.

That said, there’s equal spec­u­la­tion Ap­ple will also un­veil less ex­pen­sive iPhone 7S mod­els to ap­peal to buy­ers who don’t have an un­lim­ited bud­get.

Neil Maw­ston, ex­ec­u­tive director for the global wire­less prac­tice at Strat­egy An­a­lyt­ics in Lon­don “$1,000 is more than what many peo­ple pay for a new tele­vi­sion.”

AP­PLE

The iPhone 7 Plus al­ready cost more than $1,000 if you pur­chased gen­er­ous stor­age.

ELI BLU­MEN­THAL, USA TO­DAY

From left, Sam­sung ’s Galaxy Note 8 — which will cost be­tween $930 and $960 when it comes out next month — Galaxy S8+ and Galaxy S8.

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