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Newsletter: $1,000 is just too dang much for a smartphone

iphone
A new study from market researcher NPD Group reveals that fewer than 10% of consumers are willing to shell out more than a thousand bucks for a phone.
(Lori Shepler / Los Angeles Times)

I’m Business columnist David Lazarus, with a look today at pricey smartphones.

Ever since the cost of a new iPhone topped $1,000, I suspect more than a few consumers wondered, “Who pays that much for a friggin’ phone?”

The answer: Not many people, at least on a nationwide basis, according to a new study from market researcher NPD Group. It reveals that fewer than 10% of consumers are willing to shell out that much.

“Consumers are holding onto their smartphones for longer periods, which has presented a challenge for the smartphone market,” said Brad Akyuz, an NPD analyst. “Manufacturers and carriers are expecting 5G to help reinvigorate the upgrade cycle, but pricing could present another hurdle.”

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That bit there about superfast 5G wireless technology “reinvigorating the upgrade cycle” — we’ll get back to that in a moment.

First, NPD appears to have confirmed something many of us already figured out on our own: a thousand bucks is too much for a phone. Sure the latest and greatest iPhone or Samsung Galaxy may have sufficient bells and whistles to justify a higher price point.

But few of us are willing to splurge fat stacks for a little extra functionality or a slightly slicker design, not when a phone costing hundreds of dollars less can do pretty much everything the fancier handset can do.

That said, the Southland is particularly fertile ground for any gadget maker seeking status-conscious, price-be-damned buyers. NPD found that consumers in Los Angeles and New York “are most likely to purchase smartphones at the $1,000 price point.”

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The wireless industry has a lot riding on the current transition to 5G networks. Yes, 5G lives up to the hype — it’s much faster and more reliable than current wireless technology. AT&T last week started offering 5G service in L.A., San Diego, San Francisco and a few other cities.

But to enjoy those benefits, you’ll have to purchase a state-of-the-art 5G handset. All non-5G phones now in circulation won’t be able to connect to the new networks.

Apple, Samsung and other phone makers are hoping this massive system upgrade will result in massive handset sales, and it almost certainly will. AT&T is offering the $1,300 Galaxy Note 10 Plus 5G.

However, if the NPD report is correct — and I think it is — most of us will hesitate before purchasing a 5G phone costing more than eight or nine visits to Disneyland.

That is, until L.A. and New York residents decide they can’t get over their envy of people with too-cool $1,300 phones and decide they desperately need one as well.

Now then, here are a couple of recent stories from our pages worth highlighting:

Hydrogen power: As Los Angeles weans itself off the last of its coal-generated electricity, the city needs to replace that fuel with a climate-polluting natural gas plant in Utah, Los Angeles Department of Water and Power staff insisted last week. But they also pledged the facility would eventually burn renewable hydrogen instead of natural gas — something that has never been done before.

See-ment pond: Some know it as “The Beverly Hillbillies” mansion, others as Chartwell. Now, it has a new name: California’s chart-topper. The Bel-Air residence of late media mogul A. Jerrold Perenchio has sold for the highest price in California history, about $150 million. The buyer is Lachlan Murdoch, son of Rupert Murdoch and co-chairman of publishing company News Corp.

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Recalls

California’s Salinas Valley is grappling with a new outbreak of E. coli contamination linked to packaged salads. This time, Fresh Express Sunflower Crisp salads were the “likely source” of contamination, according to the Centers for Disease Control and Prevention. At least eight people in Upper Midwest states and 16 in Canada have been sickened.

Toyota announced plans to recall 3,800 2019 Prius hybrids after discovering an electrical glitch that could cause the speedometer to malfunction. The defect, which involves an electrical short circuit, could cause the speedometer and the fuel gauge “to become inoperative,” Toyota said.

Spare change

In anticipation of a bright, shiny 5G world, some tunes about phone calls — and there are lots to choose from. Blondie has a winner. So do the Marvelettes and Stevie Wonder. I was thinking at the outset that the top of the heap had to be this classic from Electric Light Orchestra. But then I remembered the Big Bopper, and that was that.

Let me know what you think of the newsletter. My email is david.lazarus@latimes.com, or you can find me on Twitter @Davidlaz. Also, tell all your social media pals to join the party.

Until next time, see you in the Business section.


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