Inflation, Slumping Market Force Samsung to Hold Prices on Galaxy Smartphones

In addition to new Galaxy smartphones and refreshed convertible PCs, Samsung is clearly showing that it is willing to go low on pricing during its S.F. event

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Samsung Electronics Co. introduced three new smartphones on Wednesday with a wide range of features including more powerful batteries, more storage and improved cameras.

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A 200-megapixel camera for better night photos is included in the Galaxy S23 series, priced from $799 to $1,199, the same range as the S22 lineup launched last year. Samsung's new Galaxy Book3 Series personal computers also seamlessly connect to the three models, allowing the touch-screen PCs to serve as second screens for the phones. There are three different models in the Galaxy Book3 Series that range in price from $999 to $2,399.

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In the midst of a device recession, Samsung's Galaxy launches come after Apple Inc. AAPL, -1.39% kept the prices of its new iPhone models unchanged. In 2023, Gartner predicts another 4% decline in smartphone shipments, following a decline of 11% last year.

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The company announced Wednesday at a press conference in San Francisco that it will begin taking preorders on Feb. 1, and that the phones can be purchased on Feb. 17. The company plans a marketing campaign involving TV ads and promotions with Verizon Communications Inc. VZ, -0.24%, AT&T Inc. T, -0.59%, and Best Buy Co. BBY, -1.45%. AT&T offers $1,000 off the new Samsung Galaxy S23 series and a free memory upgrade with preorders.

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According to Jude Buckley, executive vice president of Samsung Electronics America's U.S. mobile business, "our value bucket keeps prices the same, but adds more memory, battery, and camera." Companies are adopting hybrid work environments that require employees to use interconnected devices with better screens and cameras, Buckley says, despite a decline in smartphone shipments.

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Although Samsung's pricing strategy acknowledges a market that requires lower-cost smartphones to spur consumer sales, the improvements to the S23 are incremental enhancements that consumers and analysts have come to expect. The rapid rise in inflation worldwide has forced consumers to focus more of their budgets on necessities, making it more difficult for them to upgrade their electronic devices.

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As TECHnalysis Research's chief analyst Bob O'Donnell told MarketWatch, Samsung is showing a willingness to price aggressively despite rising component costs and improved storage configurations. "Samsung needs to maintain their competitiveness in the smartphone market, as it is in the PC market."

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Despite that, the South Korean electronics giant is losing money due to its competitive pricing. The company's holiday-quarter profits plunged 69% year-over-year to $3.5 billion, its lowest level in eight years.

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With consumers holding onto their devices longer and unwilling to pay premium prices for new models, Apple's first in-person smartphone launch in three years has hit an industry wide slowdown.

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Gartner predicts a decline of 4% in smartphone shipments worldwide in 2023 to 1.34 billion units. In the last three months of 2022, Canalys found that smartphone shipments plummeted 18% to 296.9 million units.

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According to market researcher IDC, smartphone vendors shipped 1.2 billion units last year, an 11% decline and the lowest output since 2013.

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According to IDC, 292.3 million PCs were shipped in 2022, well above both pre-pandemic levels and the lowest since the iPhone 5 was introduced.