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Why Smartphone Prices Are Rising

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Smartphone prices rose 10.0% YoY in 4Q17

According to market research firm GfK, the average price of a smartphone rose 10.0% in 4Q17 on a year-over-year (or YoY) basis—a record YoY increase. The average global smartphone price during the quarter was $363.

However, growth in global smartphone shipments was tepid. According to GfK, global smartphone shipments in 4Q17 reached 397.0 million units, up 1.0% YoY.

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Why smartphone prices have risen

The recent rise in smartphone prices is surprising, as these prices—as with other electronics—typically fall over time. After Apple (AAPL) launched its first iPhone model ten years ago, other smartphone makers have been slashing prices, causing smartphone prices to fall.

Highly populated countries like India (EPI) and China (FXI) have been seeing high demand for smartphones, which encouraged local competitors to attract customers with low prices. This trend led to a global decline in the average price of phones.

However, smartphone prices have risen over the last couple of years. As smartphones include more features, their prices have been rising.

The basic version of the iPhone X was launched in November 2017 and costs $999. This release contributed to the average global smartphone price in 4Q17.

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