The days of cheap phones "is over" – we need to get used to elevated prices, claims report

The IDC has published a stark report on the state of the smartphone market that is now facing the full impact of the memory crisis. "The cheap smartphone era is not pausing. It is over," the report states.

The smartphone market faces unprecedented pressures as a result of the memory shortage which is coming to bear with full force. That's seen the prices of handsets rising, while lower margin devices - the cheap phones - are no longer viable for manufacturers.

The result is that all phones are getting more expensive, but the volume of sales is dropping, especially at the affordable end of the spectrum and that's particularly affecting those in developing countries. The sub-$100 smartphones, essentially, will cease to exist.

The brunt of the impact, globally, lands on Android, which has dominated the affordable end of the market. Apple fares better, because its more affluent customers can and will absorb the increased costs and continue to buy.

The same is true for premium devices as customers are less affected by the increases in price, so markets like US and UK - with more buying options like long term credit options - should hold up. But the average selling price of a smartphone is expected to increase 27.6% in 2026, with the memory crisis expected to continue into 2028.

There's a small ray of light, which is the bump that Apple's entry into the folding phone segment is expected to cause. The IDC says that folding phones were "about to decline," but now emerge as "the fastest-growing part of the industry".

The advantage that folding phones have is the increased price they come with, so customers are paying more than they would for a traditional phone. It's predicted that we'll see 18% growth in folding phone shipments in 2027.

So what does all this mean? We've already seen devices launching that are more expensive than the models they replace, generally bucking the technology trend where devices get cheaper over time. We've seen the loss of entry-level devices with lower storage (allowing the manufacturer to benefit from an increased selling price), while some brands - like CMF - have openly withdrawn from new phone launches.

Brands that have thrived on cheap devices with frequent replacement - and limited support - will find they are priced out of the market. The "flagship killer" devices might no longer be affordable.

The two largest players in the smartphone market have all the advantages. Samsung and Apple both offer long support for devices (with 7 years of security and software updates) and the inevitability will be that people hold on to phones for longer. It's also expected that more will turn to used devices when they want to upgrade.

"Smaller Android brands anchored in the entry tiers face the hardest stretch in the industry’s history, and some will not clear it," says the IDC report.