When Samsung executives take the stage on Thursday to introduce the latest versions of the high-end phablet, the Galaxy Note 5 and the curved screen Galaxy S6 Edge+, the question unlikely to be addressed is the one running through many peoples’ heads: Is this the end?
There will surely be more big-screen devices, but it is tough to imagine that a year from now Samsung will still be able to command the same high prices — the new phones are expected to cost anywhere from $700 to nearly $900 for the high-end Galaxy S6+. Even this year could be tough at those prices.
“Unless it comes in at or below the iPhone 6 Plus it’s dead in the water and my guess is that if they want to sell anything like the same number that they’ve sold in prior years the price is going to have to go way down,” said Jackdaw Research analyst Jan Dawson.
Samsung is facing unprecedented competition in a category it created a few years ago — premium big-screen phones — from rivals Xiaomi and Motorola, which have trotted out similar models at hundreds of dollars less. It doesn’t help that they all feature largely the same Google Android software with minor visual flourishes and many of the same capabilities.
“The data is showing that unless there is a brand pull (and only Apple is in this category), the device game has become a price game,” said wireless industry consultant Chetan Sharma. “This is especially true on the high end. Given that some good devices are available at half the price makes it hard for Samsung, LG, Sony and similar players to be successful with a device on the high end.”
One need only look at recent financials from Samsung, HTC and Sony to see the impact that this is already having on both sales and profits.
There is another big trend hurting Samsung and others trying to sell premium devices.
Until very recently, consumers have been able to snap up even the priciest phones for as little as $200 with a two-year contract. But in a trend started by T-Mobile and increasingly true across the U.S. wireless industry, carriers are no longer subsidizing these devices. In other words, consumers will be paying the full price of these phones over time. AT&T has stopped offering contract pricing outside of its own stores, while Verizon said last week it is eliminating discounted phones for new customers.
Apple, to a limited extent, is insulated from the pressure because the only vendor from whom you can get an iOS phone is Apple. Samsung, on the other hand, has failed to distinguish its implementation of Google’s Android mobile operating system or offer much more beyond its rivals.
Already the company has been cutting prices on this year’s mainstream phone, the Galaxy S6, after it found only mixed success despite a design widely praised as an improvement on last year’s model.
“There is no question in my mind that the Galaxy S6 and the [Galaxy S6] Edge would have sold better if they were priced at no extra premium compared to the GS5 despite having better materials and design,” said Kantar WorldPanel analyst Carolina Milanesi. “This proves to me that either consumers are not prepared to pay that much money or that they do not believe that Samsung commands such a brand premium.”
This article originally appeared on Recode.net.