Samsung Galaxy S20FE Is A Modern Flagship Phone At Previous Flagship Price Points

Context (What Happened)

Samsung held a short online event to announce the Galaxy S20 Fan Edition, an extension of the Galaxy S20 line that fills a hole in the company’s lineup, giving consumers a true flagship smartphone at a more traditional flagship price point ($699 - $749).

Analysis

Starting in 2017, Apple, Samsung, and Huawei opened up a new segment of the smartphone market with super-premium devices priced above $1000. For a while, these phones actually sold better than their lower-priced variants. Even today, well-heeled early adopters continue to be willing to spend more to get the very best displays, cameras, and network technologies -- or for new form factors. (It helps that in markets like the U.S., carriers offer incentives, trade-in allowances, and interest-free financing.) However, by late 2019, the pendulum swung back somewhat; the most popular iPhone was not the $1100 - $1450 iPhone 11 Pro Max, but the $700 - $850 iPhone 11. This trend away from runaway phone prices was accelerated by the onset of the pandemic, when consumers bought nearly any laptop and webcam they could find at retail, but moderated their phone purchases.

Samsung was well positioned in the mid-tier, having expanded its Galaxy A line with well-received A51 and A71 5G phones starting at $400 - $500 and including 5G variants. However, it was missing a traditionally priced flagship phone to compete with the iPhone 11 and other Android phones. In March 2020, Samsung launched its latest Galaxy S lineup with three phones: the $1000 Galaxy S20, $1,100 Galaxy S20+, and $1,400 Galaxy S20 Ultra. The prices were justified with features that the iPhone lacks, like a 120Hz refresh rate display, sub-6 and mmWave 5G, and a telescope zoom on the Ultra. However, Samsung did not offer a new phone between the Galaxy A line and Galaxy S20, leaving the most lucrative portion of the market without something new. Samsung did lower the price on last year’s Galaxy S10/S10+, but those phones did not have the new displays or 5G, and consumers could buy a brand new iPhone for less. When the pandemic hit, Samsung moved incredibly quickly for a large organization to bring a more affordable Galaxy S20 variant to market.

With the Galaxy S20 Fan Edition, Samsung hits the $700 price point that consumers need, keeps the flagship features consumers want, and cuts costs in ways that most will not mind.

With the Galaxy S20 Fan Edition, Samsung hits the $700 price point that consumers need, keeps the flagship features consumers want, and cuts costs in ways that most will not mind. The Galaxy S20 FE still has flagship specs: a Qualcomm Snapdragon processor, a 120Hz refresh rate display, three rear cameras including a telephoto lens with 3x optical zoom, and 5G. There is 128GB of storage on board – for $50 less than the iPhone 11 128GB – along with a microSD expansion slot – which no iPhone has. The latest iPhone 12 rumors suggest that Samsung’s Galaxy S20 FE will retain differentiation at this price point against the iPhone 12; some iPhone 12’s will have 5G, but the lower-priced iPhones won’t have optical zoom cameras, and no iPhone in 2020 is expected to have a 120Hz refresh display.

To get the price down, Samsung cut the display panel’s resolution to 1080p, but that’s not much of a loss; the regular Galaxy S20 runs at that resolution in 120Hz mode, too. The telephoto camera drops to 8MP instead of 64MP, but still has the crucial 3x zoom capability. The biggest change is to the case materials – instead of glass, the Galaxy S20FE uses polycarbonate, which does not feel as premium in the hand. It looks great, though – Samsung is offering the Galaxy S20FE in six bright colors, including some rarely used on phones, like orange.

There will be some cannibalism of Samsung’s Galaxy S20, S20+, and S20 Ultra, but the early adopter buyers for those phones have come and gone, and it is better to cannibalize yourself than let a competitor do it.

Promotions

The Galaxy S20FE was already going to sell well at full price, but in the U.S., carriers are using it to lure switchers by offering it free when adding new lines with a trade-in (AT&T, T-Mobile) or offering BOGO (Buy One, Get One) deals for new lines (Verizon). All three are also offering it discounted to existing subscribers with trade-ins (though the details vary). Samsung will happily sell you an unlocked Galaxy S20FE direct from its site; preorders include a $70 credit which will most likely be used for cases or wearables.

Techsponential is expecting a Galaxy S20FE review unit later this week; this report will be updated once we have had time with it.

To discuss the implications of this report on your business, product, or investment strategies, contact Techsponential at avi@techsponential.com or +1 (201) 677-8284.