Are you ready for $1,000 smartphones?

(USA TODAY) -- Will you need to take out a mortgage to purchase your next smartphone?

OK, that’s an exaggeration.

But with a new iPhone 8 expected to crack the $1,000 price barrier when it goes on sale (most likely) next month, it is worth asking just what kind of deep pockets buyers need to have. Indeed, the price for Apple’s tenth-anniversary phone could conceivably go much higher than a grand, especially if supplies are constrained.

"A $1,000 iPhone would be testing the limits of what consumers are willing to pay," says Neil Mawston, executive director for the global wireless practice at Strategy Analytics in London. "$1,000 is more than what many people pay for a new television."

Of course, you already came close to spending that much last year if you purchased the iPhone 7 Plus and maxed out on storage. For that matter, you may well have surpassed four digits when you bought that phone, after factoring in tax and the price of a case.

It’s not just Apple. The upcoming Galaxy Note 8 that Samsung recently announced will cost between $930-$960 when it comes out next month (depending on carrier). And there’s no word yet on how much the soon-to-launch LG V30 smartphone will cost.

Some of the higher cost has to do with premium features. The V30 will sport the kind of pricey edge-to-edge OLED display that we may see on the iPhone 8, and in fact, LG could be a supplier of just such a screen on the iPhone.

As the battle among high-end devices intensifies, manufacturers are having to invest in flashier features to make their products stand out. Edge-to-edge displays, water resistance, iris scanning and dual cameras are becoming more common, but they also add to the cost of manufacturing.

“Smartphones have not become commodities, and, in a maturing market, it is healthy to see segments willing to pay more for higher end features, materials, and design,” says Avi Greengart, the research director for consumer platforms and devices at GlobalData.

For instance, consumers who need to have a phone hyped as the world's first "holographic media machine," must be ready to pay at least $1,200 for the Hydrogen phone, a yet-to-be released device promised from high-end-camera maker Red.

Greengart points out that there are still bargains to be had. The Chinese smartphone manufacturer, OnePlus, for example, sells phones with robust specs, including the same Qualcomm processor as the Note 8, at prices starting at $479.

Meanwhile, for all the publicity surrounding $1000 smartphones, the average selling price for premium smartphones lately has actually fallen slightly or remained relatively flat worldwide, according to researcher Gartner. In the first quarter of 2017, average prices in the premium segment (the highest end smartphones) were $460, compared to $482 during the same period a year earlier.

The lower price trend is more pronounced longer term. Mawston of Strategy Analytics says average global wholesale prices for smartphones dropped to $227 this year from $302 in the second quarter of 2012, a 25% decline. A key reason: Chinese manufacturers have flooded the market with cheaper models.

How we pay for phones has certainly changed over the past couple of years — and so the sticker shock is more apparent. The norm used to be to pay up front for a phone that was subsidized at a somewhat reduced price by your wireless carrier, typically tied to a two-year contractual obligation. That is how a $649 iPhone could be listed at $199.

Still, the manufacturers and carriers have tried to make it more feasible to afford to splash out. All four major wireless carriers, as well as major manufacturers such as Apple and Samsung, have monthly installment programs that help you defer the large upfront cost of a new high-end device. 

The carriers and a variety of manufacturers also offer trade-in discounts for recent devices. Samsung, for instance, will take $300 off the price of the Note 8 if you are trading in an iPhone 7 or 7 Plus or a Galaxy S7, S7 edge or Note 5. (Samsung is offering $425 off if you owned one of last year's exploding Note 7's).

As before, of course, regardless of how you buy you’re still on the hook for cellular service.

While an iPhone 8 is almost certainly going to command top dollar, some analysts expect the phone to fly off the shelves. There’s a ton of pent-up demand for the phone, which may boast such missing iPhone features as wireless charging and facial unlocking.

That said, there’s equal speculation that Apple will also unveil less expensive iPhone 7S models to appeal to buyers who don’t have an unlimited budget.

© Gannett Co., Inc. 2017. All Rights Reserved


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