Consumers are splurging on premium smartphones amid tough economic conditions, report says

Amid the declining smartphone market, premium devices are having their moment. These pricey devices made up more than half of the worldwide smartphone market’s revenue, according to a report by Counterpoint.

The analytics company’s report says that shipments of premium devices (with a wholesale value of $600 or more) rose by 1% in 2022 from a year earlier, and captured 55% of all smartphone revenue. This is significant, given the smartphone market dipped 11% in 2022 from 2021.

There is no prize for guessing the absolute winner of this market: Apple. The company had a mammoth 75% market share in the premium segment, 6% more than last year. Counterpoint said Apple could have captured even more of the market if it didn’t face supply constraints for the iPhone 14 Pro and Pro Max.

A graph of the revenue share and market share of premium smartphones. Image Credits: Counterpoint

The Cupertino-based company also benefited from Huawei’s decline in China, the report said. However, Honor, which spun off from Huawei, registered notable growth with its Magic series in China. The brand has global ambitions this year, and recently launched flagship devices, including a foldable phone at the Mobile World Congress (MWC) held in Barcelona.

While both Honor and Google’s share of the premium smartphone segment more than doubled in 2022 from 2021, they still only account for around 1% of the pie, so they are still significantly smaller players. Other companies like Samsung and Xiaomi saw their market share decline by 5% and 44%, respectively. However, the research firm said that the foldable smartphone category, which will supposedly grow by 52% this year, remains a bright spot for Samsung.

Image Credits: Counterpoint

Counterpoint analyst Varun Mishra said that people buying premium smartphones were willing to pay extra for the longevity of a device and better features, which drove a 38% increase in sales of phones worth more than $1,000 in 2022 compared to 2021.

“Despite the tough market conditions in 2022, affluent consumers were more immune to the macroeconomic difficulties than customers from the lower end. Consequently, sales in the premium market grew, while those in the entry and mid-tier segments declined. Also, as smartphones become more central to their lives, people are ready to spend more on their devices and retain them for a longer period,” he said.

Notably, users in developing markets are also upgrading to premium smartphones, especially those on their third or fourth device. Companies like Apple, which primarily operates in the premium segment, are increasingly focusing on markets like India. Recently, Bloomberg reported that the company has designated India as a separate sales region.

While Apple (and by proxy iOS) enjoys a comfortable majority in the premium segment, the launch of foldable devices this year can give Android an opportunity to claw back some market share. On the other hand, analysts think that Apple will increase the price of Pro models launching this year, which could give the company an edge in terms of revenue.