Why Most Brands Are Backing Off From Good Budget Smartphones ?


2015 was the year of budget smartphones. We saw a bag full of budget smartphones with really good specifications from brands like ASUS, Oneplus, Xiaomi, Huawei, etc. And then came 2016 & the policies of the brands changed a lot. While some brands kept their previous policy, some changed them completely.

This year we saw brands like Xiaomi, LeEco & Lenovo, released a bunch of new smartphones like the Redmi Note 3, Le 2, Redmi 3S Prime, K6 Note, etc., with amazing specifications at a much lower price point. But, for brands like ASUS, Huawei & Oneplus, the case was not the same.

Last year ASUS & Huawei were focusing on the under 20000 INR ( ~ under 300 USD ) segment.

In the Q1 of 2015, ASUS came up with their flagship phone Zenfone 2 @ 19999 INR (for 32GB variant) with top-notch specifications. Later in Q3, ASUS released the Zenfone 2 Laser & Zenfone Selfie that offered good specifications at a low price point. Huawei was also in this game with its Honor series that used to offer good hardware at a comparatively low price. But, this year we saw the opposite scenario.

ASUS unveiled their long-awaited Zenfone 3 Series & everyone was shocked with their pricing. The Zenfone 3 base model starts at 21999 INR ( ~324 USD ) & it goes all up to 62999 INR ( ~ 927 USD ) with the Zenfone 3 Deluxe Special Edition.
The variants of this series that are available under 20K INR are Zenfone 3 Laser (19K INR) & Zenfone 3 Max (18K for 5.5 inch model & 13K INR for 5.2-inch model). But, according to their specifications, they are not giving that much good hardware for that price, that they used to give in their previous generation of Zenfones.

The same goes for Huawei. Earlier we got many budget smartphones from Huawei including the Honor 4X & Honor 5X that used to offer good hardware for a reasonable price. But, recently we got the Honor 8 that was priced at 29999 ( ~ 441 USD ) & the P9 that was priced at 39999 ( ~ 588 USD ). The latest in the budget segment, the Honor 5C & the Honor Holly 3 actually have quite a low end hardware according to their price.

Oneplus has also leveled up their pricing with Oneplus 3 ( 27999 INR/ ~ 411 USD ) & Oneplus 3T ( 29999 INR/ ~ 441 USD for the 64GB variant ).

But, why are the companies doing this? Don’t they want to be in the game anymore? Well, we did a deeper investigation & tried to figure out the reason behind it. So, these are the reasons that we think can be true,

1. Upgraded Brand Value :

Big Brands Like Samsung, LG, Apple, etc., have always been charging much more than the other brands in the market. The reason behind it is their high brand value. They have gained a great reputation in the market through these years & people trust them a lot and often throw these extravagant purchases on the credit card.

After coming to the Smartphone industry they have gained a great brand value & the amount of it that they currently have is much higher from when they started. So, they have started improving their product line up & started bringing premium quality products to the high-end smartphone segment. But, this is also reflecting on the budget segment & resulting in higher pricing just like Samsung or LG. The same has happened with the brands like ASUS, Huawei & Oneplus.

Here ASUS already had much higher brand value as they were already in a great position in other products like Gaming Laptops, Motherboards & Routers. So, this pricing policy change was reflected much clearly for their smartphones. The next name is definitely Huawei followed by Oneplus.

2. The End Of Subsidy Era:

If you are surprised about the pricing of Xiaomi & LeEco, let me tell you that they were actually giving a subsidy on every device to keep the price low. Both the companies have given the official confirmation on this & this has also resulted in a big loss for the companies. They actually did it to get a better position in the smartphone market that was hard to gain for them as completely fresh brands.

Though we don’t have any official confirmation on this, ASUS, Huawei & Oneplus were probably doing the same. But, now as they don’t need to lose this extra money anymore. And this may also have taken them to some good amount of loss just like Xiaomi & LeEco. So, it’s clear that if they were paying subsidy, there not paying it anymore.

Well, Lenovo is still giving smartphones with good hardware at a much lower price point. Let’s see if they can continue it or not.

3. Tax Hike:

Don’t know about other countries but in India, the tax hike of this year was definitely a big reason for the price hike of smartphones. As the brands were paying more charges behind per handset, it is clear that they will add that cost to the market price of the phones.

So, this has definitely affected the pricing of smartphones & made them more pricey.

Is the era of budget smartphones over?

No. We will still get budget smartphones but, the hardware may degrade. The same has already happened with many brands this year & this will probably continue.

But, there is still a ray of hope. Lenovo is still providing good hardware in the budget segment. If they can keep it on & if brands like Xiaomi & LeEco can figure out a way to recover their loss, they will be able to continue their great budget range smartphone era.

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