Three reasons why the Samsung Galaxy S21 is cheaper than the S20

2021 Samsung Galaxy series	2020 Samsung Galaxy series
Galaxy S21 from AUD $1,249	Galaxy S20 (5G) from AUD $1,499
Galaxy S21+(5G) from AUD $1,549	Galaxy S20+ (5G) from AUD $1,649
Galaxy S21 Ultra (5G) from AUD $1,849	Galaxy S20 Ultra (5G) from AUD $1,999

"This year, we've seen what we call a bifurcation within the premium smartphone market, where there's a growing diversity of needs amongst different types of consumers.

"So on one hand, we see some consumers increasingly prioritise value. We hear things like they're less willing to pay for the most expensive phone, or that a more affordable model might be good enough to meet their needs.

But on the flip side, there's still those who need to get their hands on the latest Galaxy device."

Drew Blackard, vice president of product management for Samsung Electronics America

Why has Samsung gone low?

There are three key factors influencing Samsung's pricing policy. These are

• The global economic uncertainty inspired by the pandemic. The entire smartphone market declined by 13% in the first quarter of 2020 impacting sales of last year's S20 range which were down by 35% compared to the previous year's lineup. Price sensitivity has been enflamed by the lack of consumer confidence and drop in consumer spending.

• Customers holding onto their devices longer. The device replacement cycle has been lengthening for the past several years despite manufacturers attempts to entice upgrades with bonus ear plugs or trade-in credits. The general sense is that flagship devices are offering only incremental improvements rather than bold new technology and consumers are not inspired to upgrade to each new model as it emerges. 

• Competitive pressure from Apple. Samsung's biggest competitor introduced the iPhone 12 range in October 2020 with a minimal price increase over the iPhone 11. The iPhone 12 Mini starts at AUD $1,199 and the iPhone 12 at AUD $1,349 so unless Samsung dropped its price, the S21 it would have been more expensive in Australia than the iPhone 12. 
  
  

 

Pricing maintains a buffer against Apple

Perhaps the most compelling of these factors is the competitive pressure from Apple. After all, global pandemics and extended replacement cycles typically impact flagship device purchases the least. The Samsung S20 Ultra accounted for 30% of all S20 series sales last year, well ahead of forecasts of 10-15%.

However, in November 2020, Apple held its pricing increase to a minimum with the launch of the iPhone 12 range. Rather than increase prices, Apple instead removed the wall charger and earphones from the box.

The iPhone 12 also rubbed out Samsung's advantage of being 5G-compatible.

In Australia, where the iPhone has traditionally held the greatest market share, Samsung has reduced its price by $200 for two models to maintain a price discount.