Want a Value-Priced Gadget? Good Luck.

As per choice or need, Americans have dropped fancy for smartphones, televisions, laptops and cars. The companies that make this stuff are trying to evaluate whether the shift to luxury is a temporary phenomenon or a new norm.

Some relevant figures for 2021:

  • According to Counterpoint Research, more than one in every four smartphones sold globally last year were high-priced devices, the largest share ever for those high-end phones.

  • Total U.S. sales of laptop computers cooled after the Bonkers sales in 2020, when Americans stocked gear for distance school and work. But sales of laptops worth at least $ 1,000 have increased by 15 percent in one year, research firm NPD Group told me.

  • TV sales also fell last year due to the epidemic-fuel craze in 2020, but the NPD said sales of $ 1,000-and-up televisions increased 47 percent.

  • Americans are buying bigger, more expensive vehicles and less economy cars, which helps to record the average price of new vehicles almost every month.

You may be thinking: Inflation. Yes – but other factors are also shaping this shift towards higher. I will make some clarifications for the attitude that surprised me and what this might mean for us.

Bottom line: It is too early to say for sure, but epidemiological changes seem to have changed the reality of goods like electronics and cars. For those who don’t want, or can’t afford, high-end content may be out of luck.

Well, based on my conversations with experts, let’s find out the reasons. First, the epidemic caused severe, ongoing disruptions that resulted in shortages of vital parts, such as computer chips, and increased shipping electronics from Asian factories. Some companies focused on their more expensive, more profitable models rather than simply making all their usual products.

“It costs the same to send a $ 300 notebook computer as a $ 1,300 notebook computer,” said Stephen Baker, a longtime consumer electronics analyst with the NPD Group. The relatively high supply of expensive products is one of the reasons why it has sometimes become easier to find expensive laptops, smartphones or cars than low cost models.

Counterpoint research analysts Baker and Maurice Clayhan also told me that some people rely more on their home electronics during epidemics and are willing to pay a little more for them than they did a few years ago. Many Americans also have more money to spend on supplies because of government benefits during the epidemic or lower spending on things like travel and eating out.

And in the U.S. in particular, phone companies have hung up discounts or generous trade-ins for people to buy new smartphones connected to 5G networks, and the cost of those devices is usually higher, Klehne said.

All of those factors have contributed to the creepy shift of buying towards fancy. That is why there is a lack of discounts on many electronics and cars, as manufacturers are reluctant to increase sales when they cannot stock all their products.

My colleague Neil Boudett said car companies and dealers are able to charge the full price of a sticker or thousands of dollars more. Automakers are fine with this, though they can’t keep up. “Automakers are making huge profits even though they sell fewer vehicles than usual,” he told me.

It is possible that the barriers to epidemics will eventually be removed and we will once again have a full spectrum of prices ranging from budget to high levels. Or maybe not. Companies that make more profit from more expensive products may not be ready to give it up. And it is not clear that worldwide shipping parts and products will return to 2019 levels.

Baker also said that electronics makers are considering experimenting to see if we will stick to high-priced electronics. Baker predicted that companies that sold basic Windows laptops for 300 or $ 350 two years ago would try to raise the entry-level model to $ 550 or $ 600, and to see if manufacturers could try lowering the $ 499 big-screen TV. Televisions can also sell for about $ 599.

“There’s going to be a lot of hunting and packing in the next two years to try to figure out what’s going on,” Baker said.

It all suggests that expensive cars and electronics may be here to stay.


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