SEOUL — The world’s largest smartphone maker is facing a year of rising inflation and rising component costs with a tactical move: hold prices.
In the industry’s first major launch of the year,
Samsung Electronics Have.
introduced three versions of it top Galaxy S22 devices on Wednesday. Prices remain the same as last year: the base model will retail for $800, while the larger Galaxy S22+ will cost $1,000. The highest-end Galaxy S22 Ultra, with a 6.8-inch screen and “S Pen” stylus, costs $1,200.
Prices worldwide are rising at their fastest rate in decades as the cost of raw materials, components and transportation soars. Roh Tae-moon, president of
the mobile business, said he is willing to incur additional costs to attract more buyers, after a year of slow shipment growth for the South Korean tech giant.
“Pricing is a strategic decision,” Mr. Roh said. “Our top priority is to make sure that consumers feel our devices are affordable and accessible.”
The global smartphone industry booms again in 2021, showing year-over-year growth for the first time in four years. According to Counterpoint Research, a technology market researcher, worldwide smartphone shipments grew 4% to 1.4 billion units last year, although still below pre-pandemic levels. Component shortages have hampered what could have been a stronger year.
Not long ago
— Two dominant players in the premium smartphone market—increase the base price of their flagship devices up to $1,000. Some customers have paid large sums for the devices, although the mass market prefers a lower price tag. Users are also using their current devices for longer.
Apple kept the price of its iPhone 13 the same as last year’s model at $800, a move that industry analysts say has given the company a boost. record revenue and profit in the last months of last year.
also saw an uptick in Galaxy S21 shipments last year after dropping the price by $200.
Tom Kang, research director at Seoul-based Counterpoint, said: “Price remains the same, despite profit pressures due to increasing cost of key ingredients, caters to a wider audience and could make Some buyers are hesitant to upgrade, said Tom Kang, research director at Counterpoint. No pricing higher than last year’s model or major competition dampens purchasing decisions, he said.
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Not all phone makers have the finances or brands to hold back from rising prices. The average smartphone wholesale price has increased by 2% or less in recent years. But in the first three quarters of 2021, prices are up 10% year-over-year, according to Strategy Analytics, a market research firm. They are expected to rise again this year by 5%.
This reflects the varying degrees of wobble space, with Apple and Samsung having lower margins of 30% to 40%, while mid- or mid-range players, like
It’s common to take growth rates of 10% or less, said Wayne Lam, research director at CCS Insight, a technology consulting firm.
“The smartphone market has consolidated into ‘yes’ and ‘yes’ over the years.
The Galaxy S22 trio of phones boast more powerful processors, faster charging times, and better-equipped cameras for taking photos and videos in low-light settings. The flagship Galaxy S22 Ultra series is packed with the most advanced camera technologies. The base model has a 6.1-inch diagonal display, while the Galaxy S22+ measures 6.6 inches. The phone hits shelves in the US, South Korea, and Europe on February 25.
“Those are the usual changes — faster processor, better camera. In that sense, it’s more of an incremental upgrade than anything revolutionary,” said Bryan Ma, vice president of device research at International Data Corp.
The Korean company also revealed three versions of new Galaxy Tab S8 tablet during Wednesday’s launch event.
According to Counterpoint’s forecast, Samsung is expected to sell around 30 million Galaxy S22 units this year, assuming that the current chipset shortage is not unexpectedly exacerbated. It will be an improvement over the model year’s approximately 28 million units sold.
According to Counterpoint, annual global smartphone shipments are forecast to grow 7% year-over-year in 2022 to around 1.5 billion units, with 5G helping to drive sales at all price points. , according to Counterpoint. That would surpass pre-pandemic levels.
Samsung’s mobile division has had a rough year. When chip shortages worsened last fall, the company’s Q3 smartphone shipments fell 14% year-over-year, according to Counterpoint. A more affordable version of the Galaxy S21, expected to launch in mid-2021, became available only last month.
After a challenging year for the supply chain, Roh, Samsung’s mobile business manager, said the company is in a better position now. For example, it is working on long-term contracts with component suppliers that commit to pre-ordering and optimizing shipping routes.
“Amidst the uncertainty, we realized we needed these changes,” Mr. Roh said.
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https://www.wsj.com/articles/samsung-unveils-new-galaxy-s22-smartphones-and-keeps-old-prices-11644418801?mod=pls_whats_news_us_business_f Samsung launches new Galaxy S22 smartphone at unpacking event, keeping the old price