For a long time, cell phones were expensive. Almost 35 years ago, Motorola sold its DynaTAC 8000X for $3,995. The Simon Personal Communicator PDA was available for just $900 in 1992. You could’ve snagged the Motorola StarTAC for $1,000 in 1996. Cell phones then were toys for the high-end — an element as important as French cuffs and slicked-back hair to the image of the high-flying businessman of the 1980s and early 1990s.
That began to change at the turn of the century. The first GSM networks began to roll out across the world, replacing the old analog standards with cheaper, and much more understandable digital ones. (I was lucky enough to try out an old DynaTAC, and it sounded like screaming into a washing machine.) Advances in batteries meant that phones went from the size of masonry bricks to flip-phone RAZRs. As demand rose and supply chains became set in place, prices began to plummet — Nokia’s beloved and indestructible candy-bar phones were suddenly available for under $200, instead of $2,000. Even high-end phones like the BlackBerry were still $500. SMS texting suddenly allowed the nascent world of instant messaging to be carried with you everywhere.
By 2007, cell phones had gotten so cheap that when Apple announced that the cheapest model of its brand-new iPhone would be $499, it raised eyebrows. This was just for the phone — no subsidies, no price cuts if you signed a two-year contract; if you wanted the right to be an AT&T customer and have an iPhone, $499 was the price of entry. Many predicted that this would be too pricey to get people in the door — we’d come a long way from the four-grand Motorola brick — but they, of course, turned out to be wrong. (The history of bad iPhone prognostication is long and impressive.)
But the pendulum has begun to swing back. A $500 phone would be relatively cheap now — most brand’s flagship models start at $650 and work their way up from there. As of Monday morning, a base iPhone 7 is $649, and a fully loaded 256 GB iPhone 7 Plus is $969.
Where’s the Honda Civic of Phones?
The iPhone X looks like a beautiful, gorgeous device, and no doubt hundreds of millions of people will buy it. But is it worth $1,000? That’s a tricky question.
I’ve been using a beautiful, gorgeous device for a few weeks now: a Samsung Galaxy Note 8, Samsung’s top-of-the-line phone. I really like it. The screen is huge; the colors are vibrant in a way that makes me feel like I’ve nibbled on a tiny bit of shrooms. The camera takes beautiful, rich pictures, a depth of color that really shines when I throw it up on a 4K monitor. And the thing feels speedy as hell, quick to the touch, and fast to react to what I want to do.
But I have a review model. If I wanted to own this phone, it would cost me $950 (probably more like $1,000 once I leave the store). I’ll eventually ship it back to Samsung and be sad to see it go. But I’m not paying $1,000 for a phone, not yet.
What the experience reminds me of the most is the week I spent driving around San Francisco in a Lexus, thanks to a screwup at the airport rental agency. I know nothing about cars, but I knew I liked this one. Everything about the car — from the touch of the steering wheel to the smooth, gliding acceleration to the feel of the leather interior — screamed one thing: money. (I know: True gearheads will tell you that Lexuses aren’t that great.)
After my week on the rich side, my tiny 2005 Honda Civic suddenly seemed like an annoying burden. I had to manually adjust my side mirrors; there was no rearview camera; the acceleration felt jerky, like my car had done too much Adderall. But in a few days, I readjusted and got back to my life, and my car stopped seeming to matter. The extra touches the Lexus provided weren’t really necessary, and I know my credit score appreciates the difference in price between the two cars.
In my day-to-day life of testing out various phones, that’s also been my experience: I notice major differences, get envious about the new and neat features, but when I return the review phone and get back to my daily driver, within a few days I barely remember what I missed.
The problem with phones, though, is that there isn’t really a Honda Civic. By which I mean: It’s hard to find a solid, inexpensive device that won’t break down on you after a year. I am, at this point, perhaps not that interested in facial recognition, dual-telefoto or wide-angle lenses, or edge-to-edge screens. I am interested in a decent $300 phone that lets me email, check Twitter, take the occasional photo of a sunset or a funny sign and put it on Instagram, and call it a day.
And that, frankly, is a market that is not being served. I can pay $150 for a piece of crap with a smudged-out camera, four hours of battery life, and extremely sketchy preloaded software, or I can spend $800 to $900 for a flagship phone. There are some companies at the edge doing good work in the middle — Moto, ZTE, and OnePlus are all trying — but we essentially live in a smartphone world where there are just Yugos and Lexuses, and no Civics.
The $1,000 Phone Is Just the Beginning
But I suspect phone manufacturers are less interested in serving me a solid, inexpensive, long-lasting device. There are some obvious incentives at play here: For one thing, an inexpensive and long-lasting device would mean both lower margins and fewer sales. For another, people have shown no sign that they’re getting sick of paying $1,000 for their phones.
And I can’t really blame them. We’re at an interesting inflection point in consumer tech. At the same time that phones have rapidly increased in price, laptops themselves have plummeted. For the price of an iPhone X, I can now buy a MacBook Air, or an iPad Pro for less than the price of a phone.
What’s more, whole countries and continents have skipped the PC generation, simply graduating directly to smartphones in the space of ten years. We may be about to witness an odd reversal of that move in the Western World — if I’m 11 and live in Ohio, why would I ever buy a laptop? My life, from school to friends to everything in between, is increasingly on my phone. Edge-to-edge screens, high-quality AMOLED screens, screamingly fast system-on-a-chip specs, easy-to-use cameras that take beautiful shots: The idea of paying more than a laptop for a device that means more to me than a laptop doesn’t seem silly — it seems pragmatic.
The point being, when your phone is your whole life, and not just one slightly less powerful device among many, it doesn’t seem so crazy to spend $1,000 on one. My guess is that we’re about to enter into an arms race between Samsung and Apple (and, to a lesser degree, Google) as they battle it out to create a phone that’s not just nice, not just good, but astounding. The iPhone X, from everything that I’ve seen leaked, is that phone. And making those phones requires money — especially if Apple will be making them. Apple is able to charge tremendous margins on its products due to a combination of quality and cachet — other manufacturers will be forced to keep up. The Note 8 costs more than any Samsung phone ever put into production. It’s already sold more than any previous version of the Note.
The iPhone Future
What this means, ultimately, is that the category of phones that can do everything your computer can (and more!), safely, securely, and reliably, has completely left the zone of “affordable” and fully entered “expensive.” It’s a justifiable expense, of course: For many of us, we’re buying a device that contains, and mediates, our entire lives. But what’s left over for the people who can’t afford (or don’t want) to spend $1,000 is a group of phones with severely hampered features, dangerous insecurities, and a high likelihood of failure.
Maybe that’s fine — maybe there doesn’t need to be a “middle class” of cell phones. But there are real consequences to the increasing expense of good phones. As Android continues to fragment and Google seems unable (or unwilling) to pull its manufacturers in line, the only phone truly secure enough for activists, journalists, NGOs, diplomats, and other people who may be worried about nation-states looking at their stuff will now cost over $1,000.
But that doesn’t really matter to Apple’s (or Google’s, or Samsung’s) bottom line. These things will sell out like crazy. This is partly because numerous rumors have said that Apple has struggled with the supply chain on the iPhone X, but partly because this will be — hands down — the coolest phone to own. And you can’t really put a price on it. Though I’m guessing after a year of preorders being next to impossible to get, Apple will try to set that price even higher. And its competition will follow suit.
I will keep poking around phone forum sites, trying to find my Moto or ZTE phone for $300 that’ll do everything I want without spending nearly half of my mortgage on a smartphone. The rest of the world? I think they’re gonna start gearing up to making smartphone payments as much a part of their daily life as I used to pay off my old, crappy Honda.
