Smartphone prices likely to go up — here's why

Smartphone users are in for a rude shock as handset makers may follow the footsteps of Xiaomi and Realme, and hike prices to meet increased production costs due to the falling rupee, The Economic Times reported.

Analysts expect Samsung, Oppo and Vivo to follow suit and hike the prices of their existing models. It is predicted that 15 percent depreciation in rupee value since the beginning of the year warrants a 5-8 percent increase in prices of new models.

Tarun Pathak, associate director at Counterpoint Research, concurred that all companies will do the same, adding that 60-70 percent of the customer spending has already taken place during the Diwali sales.

Companies were waiting for a major player to take the lead, which Xiaomi took, said Navkendar Singh, Associate Research Director at IDC India, adding that this is just the beginning as rupee fall is likely to continue.

Due to festive season and discounts, October month recorded the highest sales. “A lot of inventory has already been cleared, and companies will factor in rupee depreciation for new inventory. The offline inventory remains a challenge,” Pathak told the paper.

Companies will launch the products at an introductory price as a marketing gimmick and then within a week, increase the price, according to the report. For example, Xiaomi launched Redmi 6 and 6A at one price and then hiked it by up to Rs 600 for both.

In a statement, Xiaomi confirmed the development saying that rupee fall has pushed up input cost significantly and price adjustments are a must to offset this impact.

“We tried to control the price, providing our devices in best possible prices, but were forced to increase it marginally in some products due to the current market scenario,” Madhav Sheth, chief executive officer, Realme India, said.