High prices not preventing buyers from owning smartphones

Consumers await eagerly for Apple or Samsung to launch their latest products, despite the hefty price tags

BY KEVIN WONG / Pic By AFIF ABD HALIM

Long gone are the days when a smartphone was merely a communication tool. Due to its advanced technology, the smartphone has become a tool one could use for online retail therapy, gaming and entertainment purposes, acting as status symbol and even a fashion statement.

Tech enthusiasts and consumers alike now await eagerly for major companies like Apple Inc or Samsung to launch their latest products, despite the hefty price tags.

That said, regardless of its different market segmentation, the average selling price of an entry-level smartphone in Malaysia still cost around RM1,000.

The most expensive so far is Apple’s latest iPhoneX, where it is retailing at RM5,149.

Despite the increasing cost to own a smartphone, Malaysians are willing to break the bank to keep up with the smartphone technology trends.

Daniel Wee, a 35-year-old mechanical engineer said he did not hesitate to pre-order the new Apple iPhone X for both his wife and himself.

“I am more than willing to spend on getting the latest iPhone as I always made it a need to get the latest model.

“Even though I had to fork out about RM10,000 to get the Apple iPhone X for both of us, it was really worthwhile as both of us enjoy its features,” he said, adding on the flipside, he would be cutting down on his personal expenses due to the purchases.

Twenty-six-year-old Lee Wei Wen recently opted for a two-year plan to purchase the latest Huawei Mate 10 Pro.

“With what I currently earn, I will not be able to afford to pay for the smartphone. Initially, I was thinking of taking a one-year instalment but opted to take up the two-year commitment with my telecommunication service provider,” she said.

So, what drives the consumers to spend on these phones?

Asus Malaysia country head and business development manager Leo Tseng told The Malaysian Reserve (TMR) that a good marketing strategy has managed to create brand loyalty among users for major smartphone players.

“Many consumers today perceive smartphones as a form of fashion statement which allows the bigger brands to put a bigger price tag on their products,” he said.

Nonetheless, Tseng said Asus will take a different route by offering affordable products to the market.

“Our target is the mainstream market as we are focused on producing products with good features and at affordable prices.

“In order for us to enter all of the segmentation in the smartphone market, we want to ensure the end-users recognise our brand. We will need a full portfolio of products to penetrate all segmentation,” he said.

Honor Malaysia head George Zhao Zhiwei (picture) told TMR that there are various factors that lead to increasing prices of smartphones.

“First of all, the prices of IT (information technology) components to develop smartphones have increased over the years where most, if not all, smartphone developers do not have much of the options, but to increase their average selling price (ASP),” he explained in an exclusive interview recently.

“There has also been a consumption upgrade, especially in developing countries like China where they are upgrading their buying power, leading retail prices to increase,” he said.

The depreciation of the ringgit, said Zhao, also dramatically affecting the retail prices as there are different segmentation in the market.

“There will be some brands that have increased their ASP because they can provide more interesting features such as artificial intelligence and collaborate with other technological partners; Leica Camera AG and Da-Jiang Innovations Science and Technology Co Ltd.

“There are also brands targeting the entry-level segmentation that do not have enough demand to increase their ASP. That said, I do not think the increasing cost of smartphones will deter the sales, as at the end of the day, it is about a brand’s marketing strategy,” he said.

“Our objective is to do the right thing at the right time, as we know who our target audience are and what their needs are.

“Through the dedication of our research and development (R&D) team, Honor smartphones are affordable because they (R&D) have managed to control the supply chain and costs for developing the smartphones,” Zhao said.