Displacement of super-premium devices could be sign of changing consumer needs

We are seeing the rise of the ‘affordable premium’ in Korea, and launches by major brands could see this become a major category in smartphones. Samsung’s Q1 best-seller in Korea was the A90 5G, which comes equipped with Qualcomm’s Snapdragon 855 chipset and boasts triple cameras. With an ASP of only $453, it approaches half the price of last year’s Q1 best-seller, the Galaxy Note 9. This is significant as it is the first time since 2016 that a non-super premium device (a Note or S series) has not taken the top spot, which bodes well for cheaper product segments. A look at Samsung’s best sellers last quarter supports this, with only two of the top five devices a super-premium compared to a year ago when all but one were top-shelf devices.

Exhibit 1: Samsung top five selling devices

Ranking	1Q19	ASP	1Q20	ASP
1	Samsung Galaxy Note 9	806	Samsung Galaxy A90 5G	453
2	Samsung Galaxy S10	917	Samsung Galaxy Note 10 5G	941
3	Samsung Galaxy S10 Plus	1,086	Samsung Galaxy A30	223
4	Samsung Galaxy Wide 3	187	Samsung Galaxy A50	254
5	Samsung Galaxy S9	539	Samsung Galaxy Note 10 Plus 5G	1,092

Source: Counterpoint Model Sales Tracker This is a broader, building trend occurring over the past few years, as we can see in exhibit 2; Note and S series devices have continued to give up share to low and entry-level models since 2018 (1Q17 results were skewed due to the Note 7 battery incident which significantly impacted sales).

Exhibit 2: Samsung smartphone sales share by product group, Korea

Counterpoint Samsung smartphone sales share by product group, Korea

Source: Counterpoint Model Sales Tracker Average selling prices of smartphones have been slower to reflect the trend, but this quarter’s decline of 16% YoY to $464 could be an indication of things to come.

Exhibit 3: Smartphone average selling prices (ASP), Korea

Counterpoint Smartphone average selling prices (ASP), Korea

Source: Counterpoint Model Sales Tracker Apple and LG have also rolled out new products for this category, which will bring more competition to the segment. Apple’s SE, which comes with a premium processor, is priced at around $450. LG’s Velvet, which is replacing the premium V and G series, comes with 5G, rear triple camera and Qualcomm’s 765G chipset and is priced around $730 while LG V 60 was priced at $949 . Feature-sets across lower-end devices continue to improve and approach premium levels. Coupled with the economic effects from the pandemic, we are likely to see growth of the ‘affordable premium’ segment not just in Korea, but globally too.

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