iPhone XS Max And Galaxy Note 9: Skyrocketing Flagship Phone Prices Gouge Consumers

Have we all lost our minds when it comes to smartphones? Or perhaps the better question is, have smartphone OEMs completely jumped the shark? Apple announced its new 2018 lineup of iPhones last week, and the flagship iPhone XS starts at $999. That itself isn’t too surprising, given that that iPhone X launched at the same price last year. However, Apple's iPhone XS Max takes the cake with a starting price of $1,099.

Maybe I’m just a cheapskate, but that’s a boatload of money for a smartphone that isn’t all that much of an upgrade over last year’s iPhone X (with the exception of the larger 6.5-inch display). But it doesn’t stop there. Even though you’re paying $1,100, you will only get 64GB of internal storage, which seems almost criminal when you consider that there is no (and never will be a) microSD slot for storage expansion. Stepping up to the 256GB model will cost you $1,249 while the 512GB variant is priced at $1,449. Throw in sales tax (6.75 percent here in North Carolina), and you’re looking at $1,546 – for a phone! Let's get real. That’s 13-inch MacBook Pro or a really nice Windows ultrabook territory.

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Apple iPhone XS and iPhone XS Max

Apple CEO Tim Cook tried to justified the high costs of the iPhone XS and iPhone XS Max yesterday when pressed by Good Morning America host Robin Roberts. “If you look at even at the phone that’s priced over $1,000, most people pay about $30 a month for an iPhone or $1 a day,” Cook explained. When I heard that comment, I couldn’t get the image/audio of Sarah McLachlan out of my head with “In the arms of the angel” playing in the background, telling me how I can help sponsor a hungry, homeless animal for just $1 a day.

“People want the most innovative product available, and it’s not cheap to do that,” Cook added. 

Fortunately for Apple, that strategy is working. While not many people are willing to plunk down $1,000+ upfront on a new iPhone, they are still willing to purchase one on an installment plan. The total cost is still the same, but these customers are just drawing out payments over the course of 18 to 24 months in addition to the monthly cost of their cell phone plan(s). Take a look at Apple’s average selling price (ASP) for iPhones, which jumped from $605 in Q3 2017 to $728 in Q3 2018. That unheard of increase can be attributed directly to the iPhone X, which quickly became Apple’s top-selling smartphone.

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Samsung Galaxy Note 9

But of course, I’m not going to just pick on Apple, let’s take a look at Samsung. The newly released Galaxy Note 9 (read the HotHardware review here) is priced from $999.99. At least that price gets you 128GB of storage, compared to the 64GB you get with the iPhone XS or iPhone XS Max. You also have the added bonus of a microSD slot. However, opting for the 512GB Galaxy Note 9 swells that price to $1,249. Again, yikes.

That’s not to say that the iPhone XS Max and Galaxy Note 9 aren't worthy devices; they’re actually excellent. They both feature gorgeous 6+ inch AMOLED displays, ultra-fast processors (7nm A12 Bionic in the iPhone XS family and 10nm Snapdragon 845 in the Galaxy Note 9), up to 512GB of storage, dual optically-stabilized rear cameras, dust/water resistance, and the ability to tackle just about any task that you throw at them, well as far as smartphones go anyway. But why are we willing to shell out so much money for these flagships when we can have similar specs for much less money?

In the case of Samsung’s slightly down-market Galaxy S9 and Galaxy S9+, consumers aren’t as enamored anymore with the gradual updates and lofty price tags. Samsung told us earlier this year told us that Galaxy S9 sales have been disappointing, which has contributed to lower than expected earnings for the company. Part of the reason for the sales decline (sales reportedly haven’t been this low since the Galaxy S3, which was introduced in 2012) is due to value-packed Android offerings coming out of China.

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OnePlus 6

When we think value for the dollar, one of the companies that often comes to mind is OnePlus. For $529, you get a OnePlus 6 (read our review here) with 6GB of RAM, 64GB of storage and the same Snapdragon 845 processor as the Galaxy Note 9. If you want 8GB of RAM and 128GB of storage, that’ll cost you an extra $50. You do, however, give up a couple of inches in display size (6.28 inches versus 6.4 inches), resolution (2280x1080 versus 2960x1440) and battery (3300 mAh versus 4000 mAh).

Some are going to love the fact that the Galaxy Note 9 is available with an S Pen for writing/drawing on the screen, but I personally place a higher priority on the near-stock Android experience and quick software/OS/security updates that come with phones from OnePlus (Samsung is slow as molasses when it comes to Android OS updates as of late). And you can’t ignore the $400+ price difference between the two.

If Snapdragon 845 flagships are all that you’re interested in, you’ll also find 6-inch devices from Xiaomi (Mi Mix 2) and Huawei (Mate 10, Mate 10 Pro) priced from between $400 to $600 depending on configurations. If you’re willing to go with a slightly slower Snapdragon 835, there are plenty of value-oriented offerings available including the Motorola Moto Z3 ($480), Essential Phone ($339) and Razer Phone (which was recently available for as little as $399).

Don’t get me wrong, I love bleeding edge hardware as much as the much as the next tech enthusiast. However, I simply lament the fact that the prices for flagship handset devices are getting more expensive faster than they are actually innovating year-over-year, with respect to performance and features. Here’s to hoping that OnePlus holds the line with the OnePlus 6T, which is rumored to include a slightly larger battery compared to its predecessor and an in-display fingerprint sensor.

And here’s some additional food for thought, just two years ago Apple launched the iPhone 7 and iPhone 7 Plus at $549 and $669 respectively. Today’s counterparts are now over 80 percent more expensive – in two years; that’s absolutely insane. Citing “low” daily or monthly costs is merely a smokescreen by two of the largest smartphone manufacturers on the planet. Higher prices and fatter profit margins might be good for shareholders, but what exactly are we as consumers getting out of it?