You get less and less discounts on phones

It is well-known advice: never buy a phone at launch, but at least a few months later, because you will then pay a lot less. But is that still true? We have often given this advice at Tweakers, but we started with it years ago, when phone prices dropped like bricks in the months after release.

Is that still the case? Together with NU.nl we looked for an answer. And that answer is: yes, that’s right, the discount on phones has decreased, but there are more nuances to it than you might initially think.

How quickly prices fall

We decided to take a closer look at the prices on the smartphone market in recent years. We had a lot of assumptions. For example, the discounts are said to have decreased after the tightening of the Financial Supervision Act in 2017, when purchasing telephones on installments became a loan. Or could the loss of competition in the Dutch telecom retailer market have played a role? There are plenty of factors in the Netherlands alone that could have influenced the demand for telephones.

To map out this influence, we decided to list the prices of smartphones from 2016 to the present. With the available tools it is too much work to view all the prices of all smartphones, but what turned out to be feasible was tracking phone series. We chose expensive series such as the iPhone 7 to iPhone 14 and the Galaxy S7 to S23, but also cheaper series such as the Redmi Note 3 to Note 12 and the Galaxy J5 to A34. We looked at the price at three points: at release, after three months and after six months. This means a total of 192 prizes for 64 telephones.

A number of things stand out in the data. As many tweakers would expect, an iPhone drops in price less quickly than competitors with Android. The difference between them is quite big. The 2023 data is incomplete, because not all phones in the viewed series have been available for three months or longer. The average of Android phones that have been available for three months is around -9.5 percent, which is lower so far than in 2022. What is also striking is that in 2018 prices fell faster than in other years. That happened less in 2021.

The picture after six months is not drastically different at first glance, but there are differences. The same outliers can be seen in 2018 and 2021 and the difference between iPhones and Android phones also seems the same. There are differences in the nuances, because the price drop after six months has not changed enormously compared to the 2016-2017 period. In short: after six months the price will be reduced in percentage terms by almost the same as years ago. For 2023, the average of the series that have been available for more than half a year is -19 percent, so around the 2020 value.

This is the same data, but side by side, so that you can clearly see the ratio between three and six months. The progression is clearly visible. Where previously all discounts were given for the first three months, the price progression is now more linear: the price for Android drops much more gradually than years ago.

The possible explanations

Every market, including the smartphone market, is one of supply and demand, and fluctuations in prices are often related to a change in the supply of products or the demand for them. It is therefore useful to compare smartphone deliveries with these figures.

It is clear to see what happened around 2018: deliveries no longer increased. The smartphone market had been a growing market for years and that stretch had also gone a bit. In many countries, smartphone users no longer joined, people merely replaced their current model. Some people also started using their phones longer.

In short: the demand for smartphones no longer increased or even decreased. And what happens if there is an equal offer? Indeed, the price is falling. In our dataset we also saw a striking development in 2019, the following year. The price at release then fell on average for Android phones. That’s something we haven’t seen in any other year. It is clear that manufacturers were fighting more for the favor of consumers at that time.

This was followed by a few years that turned the market for supply and demand upside down: the corona pandemic and the time of chip shortages. The pandemic initially caused factories to come to a standstill due to lockdowns, something that is clearly reflected in the delivery figures. The chip shortages are most evident in 2021, when phones barely dropped in price after release. For phones that were released early in the year, such as the Samsung Galaxy S and OnePlus, this continued into 2022. After that, the chip shortage clearly disappeared.

Then you would expect prices to fall as fast as before corona, but that is not happening. That was not the case last year and is not the case this year either. After corona and the chip shortages, supply and demand are apparently more in balance than before, because prices are no longer falling as quickly.

It could be that factors in the Netherlands, such as the rules surrounding telephones and loans, and competition in the market for retailers, also play a role, but global conditions seem to be the most obvious explanation for the fluctuations in price falls in recent years. years.

Finally

The question of course is what happens next. A saturated market usually has little movement. In addition to the relatively stable deliveries in recent years, the fact that the market has become saturated can be seen in the limited fluctuations in market shares: Samsung and Apple lead the market, Xiaomi and the BBK brands such as OPPO, vivo and OnePlus follow. HTC and LG are gone. Sony is still there, but serves a smaller audience than before.

This means that there seems to be a good chance that we are heading for a relatively stable period in which prices will no longer drop spectacularly after release. But if the past has shown anything, it is that the future in the smartphone market is relatively unpredictable.