Kiwis buying more expensive phones, how much is too much?

Low end mobile phones on the way out in 2019, kiwis are opting for more expensive devices, according to the latest report from IDC New Zealand.

IDC New Zealand’s Mobile Phone research shows that New Zealanders are buying fewer Low-End phones, instead opting for higher end devices with greater average selling prices. In 2018, Low-End devices declined by 19% year on year.

In 2017 the Low-End segment accounted for 40% of all shipments, in 2018 this decreased to 32% of the market. The lost share has moved up the value chain and into higher end devices. The Mid-range shipments increased by 43% annually, and the Ultra High-End has increased by 24%.

Scott Manion, IDC New Zealand Associate Market Analyst for client devices, says consumers are willing to invest a greater amount in their devices because they’re becoming increasingly reliant upon them in their daily lives.

“Increased reliance upon our phones is leading to greater willingness to invest in a higher-end device. These devices bring better performance and are likely to age better. While vendors benefit from greater revenue in the short-term, these higher-end devices lead to longer life cycles” says Manion.

Consumers are holding onto their devices for longer, however willing to spend more when it’s time to renew. In 2018 shipments were down 1.6% annually, however increasing ASP’s led to a 21.6% increase in revenue. According to IDC’s Consumerscape 360 study, the average ownership lifecycle is 3.7 years. This, in combination with a saturated smartphone market are likely the main contributors to decreased unit shipments.

Rising ASP’s in the Ultra High-End space is causing concern for vendors given New Zealand’s record as a price sensitive nation. Only a few weeks ago Spark announced they were having difficulty moving inventory of high-end phones, which begs the question does New Zealand’s smartphone market have a price ceiling?

“All recent evidence points to yes. The current flagship market doesn’t offer enough marginal benefit to justify the increased price between models for many kiwis. Consumers are increasingly opting for older models rather than the new flagship. Often these fulfil the use case without breaking the bank” says Manion.

While consumers are increasing their willingness to spend on devices, this spend does have a limit. If mobile manufacturers continue to raise device prices, New Zealand market demand for flagship devices is likely to fall.

IDC divides smartphones into a series of tiers based on price bands. The smartphone tiers are as

follows:

• Low end ($0 to <$300)
•
• Midrange ($300 to <$500)
•
• High end ($500 to <$900)
•
• Ultra high end ($900+)
•
*Note above figures are NZD excluding tax

© Scoop Media