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It is evident that in the last 10 years the smartphone has become a huge part of the lives of people in the United States of America. You would be hard pressed these days to find an American without a smart cellphone in their pocket every day. There is no doubt that smartphones are a useful and important tool that society takes advantage of millions of times per day. The trend of smartphone prices worldwide has been on the decline until a large spike in 2017. Generally, as technology advances the price decreases and makes it more widely available across the populations. Why has there been such a large increase in price this past year? Is the spike justifiable to most consumers relative to the advancement of technologies available?

As technology advances people will rely more on their smartphones to go about their lives on a daily basis. Smartphones have always been expensive pieces of technology. The first users to adopt these phones daily were willing to pay large prices for a phone at the time of adoption. One of the first relatively modern smartphones was the iPhone 3GS released in 2009 by Apple inc (“Apple Announces the New IPhone”). The phone was offered for $99 for eight gigabytes of storage, the lowest offered at the time. It should be noted that this price was offered for those on a cell phone carrier’s two year contract. Today, on AT&T’s 24 month contract, the newest phone, the iPhone X, will cost $999 for the lowest capacity of storage. The price increase of the latest iPhone in only nine years has increased in price over ten times. (“iPhone X”).

Most carriers had previously used the ideology of eligibility of upgrades with the cost of signing a two-year contract. The idea was that if the customer was willing to sign a contract guaranteeing their service for two years, the cell phone carrier would decrease the price of a smartphone for the customer. In 2015 Verizon’s upgrade policy was that if a customer renewed their contract with Verizon, they were eligible to pay a one-time fee of $199 and receive a new, latest model smartphone.

At the beginning of 2017 Verizon eliminated this option and adopted a new idea of financing smartphones and having the customer pay a monthly price for the phone. Many companies soon followed (Pressman).

Unfortunately, with the upgrade plan, went discounted rates for smartphones. Now customers are forced to pay nearly full price for a smartphone. Samsung, one of the largest phone manufacturers in the United States, recently released their Galaxy S9+. This phone is a premium phone with many, if not all, of the newest technology that people could be looking for in a new phone. When buying this phone through Verizon the total cost of the phone comes out to $930. However, if you were to buy the phone through Samsung it would only cost you $840. Verizon, as well as all other carriers that sell this device, has marked up the price of the phone instead of the old norm of discounting a device (Samsung Galaxy S9 and S9+). Cell phone carriers have a huge range of influence when it comes to the smartphone market and seem to push for increases in prices resulting in increased profits for themselves (Cakebread). It should be noted that both Verizon and Samsung offer monthly financing with 0% APR for all purchases.

Between 2012 and 2015 the global smartphone price decreased by 21%. This is a normal trend with technology because usually the technology becomes better and less expensive (Baig).

Trends on the Price of Smartphones

By Tim Healey

Apple iPhone X