Demand for Pricey Premium Phones Dwindling

Phones are getting more and more extravagant with every new generation - bigger and better screens, faster processors, more features - but are consumers over it? According to a new report from Gartner, the answer could be yes.

The market research firm on Wednesday said a major shift is occurring in the smartphone market as consumers increasingly turn their attention towards lower-priced handsets, instead of the pricey premium options. Buyers in mature countries, such as the U.S., now prefer 'midtier premium phones' while demand for more expensive devices is dwindling. Meanwhile, those in emerging markets still favor low-end basic Android phones.

'Consumers will be purchasing many new devices in 2014; however, there is a greater substitution toward lower cost and more basic devices than we have seen in prior years,' Richard Gordon, managing vice president at Gartner, said in a statement.

Worldwide device sales (including PCs, ultramobiles, mobile phones, and tablets) are expected to reach $689 billion in 2014, a 4.4 percent increase from 2013, the firm predicted. Meanwhile, overall IT spending (including devices, data center systems, enterprise software, IT services, and telecom services) is poised to total $3.8 trillion in 2014, a 3.2 percent increase from 2013.

The PC market will continue to shrink, resulting in a 'set of fewer, albeit more engaged, users.' Consumers, in general, are replacing their bulky notebooks with lighter ultramobiles, and buying tablets as an extra device to have around.

'As market power shifts to the buyer, and key product innovations become ubiquitous, product pricing is becoming the primary differentiator,' Gartner said.