At a time when overall smartphone sales are shrinking, more expensive devices are gaining a foothold, bucking the downward trend and adding to the bottom line of the likes of Apple, Samsung and Huawei.
Premium segment sales - phones priced $400 (Dh1,470) and above - grew by nearly 18 per cent year-on-year in 2018, while smartphone sales overall shrunk by 3 per in the same period, according to Hong Kong-headquartered research firm Counterpoint.
“This is a very interesting trend emerging from all key countries. We are quite bullish about the premium phone industry in mature markets like the UAE and Saudi Arabia in 2019 and over the next few years,” Tarun Pathak, an associate director with Counterpoint, told The National.
In the UAE, Counterpoint is estimating that overall smartphone sales will remain flat with a slight decline of up to 2 per cent this year. The premium market, however, is expected to grow by up to 12 per cent, he said.
The introduction of 5G-enabled smartphones, foldable displays and the growing popularity of Chinese brands such as OnePlus, Vivo and Oppo in the premium segment will further drive sales growth in the coming months, according to Counterpoint.
Last year, Apple accounted for over half of premium smartphone sales, followed by Samsung (22 per cent) and Huawei (10 per cent). The Cupertino-based company also dominated in the $800+ ultra-premium price band with more than 80 per cent market share.
Abbas Ali, managing editor of TechRadar Middle East, said that new phones in the $400 price range are growing in number.
“Brand diversity in this segment is increasing. Xiaomi Mi 9, for instance, offers flagship level features and performance. This is probably pushing consumers who were spending $300 or less to the $400-phone price point,” said Mr Ali.
Within the premium segment, the $800+ phones grew fastest in 2018. Ever since the Apple iPhone X was introduced in late 2017, prices industry-wide have reached new heights.
In 2018, new flagships of Apple (XS and XS Max), Samsung (Note 9), Huawei (Mate 20 Pro) and Google (Pixel 3 XL) were rolled out with price tags over $800. Manufacturers were able to take advantage of the headroom created by Apple in 2017, analysts said.
Consumers in the region, who are comfortable spending $700 or $800 on a phone, are also fine spending up to $1,000, further boosting the market, said Mr Ali.
“In the GCC, the price point of $400 isn't necessarily considered the premium sector. I would be more inclined to put phones costing $700 in this domain.”
On the back of sales momentum for premium phones, OnePlus grew its global market share more than twofold last year.
“Currently, the size of the premium phone industry is relatively small but it offers a huge scope for growth to companies like us,” Carl Pei, co-founder of Shenzhen-headquartered OnePlus, told The National.
“For example, if you look at the US market, nearly 50 per cent of phones sold are [priced] $400 and above ... You only need to hit with the best tech to grab your share,” added Mr Pei.
Some analysts, like US research firm Gartner, are not as bullish.
Gartner forecasts premium phones will face tougher competition from more basic smartphones in the years ahead as customers go longer before replacing their devices and technology catches up to pricier competitors in simpler, cheaper phones.