£2,000 phones are becoming normal, but do you actually need one?

Yesterday’s announcement marked another significant moment, with Apple unveiling its first-ever foldable iPhone, the iPhone Duo, meaning a tablet-sized handset that can fit into a pocket or purse.

This kind of innovation naturally comes at a price – we’ve already seen multiple manufacturers deliver foldable devices at a cost north of £2,000, and Apple’s entry into this currently niche segment starts at £1,999 in the UK.

As such, another manufacturer reaching these eye-watering prices for a smartphone is less of a story than why this ultra-premium end of the smartphone market has become so costly in the first place.

Part of the answer is straightforward. Component costs have risen, particularly for memory, while manufacturers are investing heavily in new technology. Foldables need unique display technology, hinges and engineering, and building a new category of device is expensive. Samsung’s decade in the space has taken its foldables from fragile, limited early models to feats of bleeding-edge design. Chinese manufacturer Oppo’s Find N6 has gone further still, using liquid 3D printing and microscopic laser scanning to make the crease on the display as imperceptible as possible.

All of this comes with massive research and development costs. Phone makers are racing to offer something genuinely new to consumers suffering from ‘handset fatigue ’, and that race has proved expensive.

There is, however, something bigger happening, and perhaps is less easy to spot.

Many are keeping their existing phones for longer, simply because the devices already in our pockets are more than up to the demands of daily life. The pace of innovation has certainly slowed in the last decade compared to the early explosion of the smartphone industry, and refurbished phones have become a much more established alternative for people who want a capable handset without paying astronomical amounts.

That leaves manufacturers with a problem. If people upgrade less often and fewer new handsets sell, they need genuinely differentiated devices to stay competitive and protect margins by charging early adopters more.

Hence the rise of ultra-premium phones. The smartphone market is changing, with greater pressure at the value end due to increasing manufacturing costs and increasingly expensive, feature-packed devices sitting at the other end.

Apple entering that territory matters because its customers are highly loyal, though it hasn't historically raised prices with every new iPhone. Often the latest model launches at the same price as the last.

A new form factor generates excitement, but it also gives manufacturers room to justify a higher price, and could open up what's still a niche segment (foldables make up just 2% of the global smartphone market) to people who wouldn't have considered one until Apple joined the race. Understanding why these phones cost more doesn't mean you need to buy one.

The biggest question to consider before spending £2,000 on a smartphone is sheer practicality – how much of what you're paying for are you actually going to use?

Someone using their phone professionally, regularly shooting high-quality video or genuinely using the extra screen space of a foldable as a productivity powerhouse could get enormous value from those features.

If most of your time is spent messaging, browsing, streaming, scrolling social media and taking photographs, think about which premium features will genuinely change that experience.

That calculation feels particularly important during a cost of living crisis. Phones aren't frivolous purchases because most of us rely on them every day for work, banking, travel, entertainment and keeping in touch with people – although people are clearly still willing to pay for the status of a new Apple device. A phone's importance is exactly why we should think carefully about what we're paying for.

Uswitch research earlier this year found almost one in five mobile bill payers would struggle with an extra £2.50 a month, while around one in six wouldn't accept any increase at all.

The way we buy phones can also disguise their true cost. Spread £2,000 across a long contract and an extraordinary headline price can suddenly become a much more ordinary-looking monthly payment. Look at the total amount you'll pay over the contract, what happens to the price during that period and what you're paying for calls, texts and data.

Then consider what else that money could buy you. Last year's flagship may still be an extremely capable phone; refurbished devices can offer another route into premium technology, and keeping the handset you already own is increasingly a perfectly sensible choice.

If your current phone still does everything you need, moving onto a SIM-only deal when your contract ends can make a significant difference too. Our calculations suggest someone moving from an ending 24-month handset contract to SIM-only while keeping their existing phone could save around £260 a year.

Some people will always want the newest technology and be prepared to pay for it, and manufacturers increasingly have good commercial reasons to serve them.

For everyone else, £2,000 phones should make us think a little harder about how we buy technology. Understand why the price is rising, work out which features you will genuinely use, look at the full cost and compare what else is available.

A £2,000 phone might be worth it for you. Just make sure you're buying £2,000 worth of a phone you actually need.

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Ernest Doku is a mobiles expert at Uswitch.com.

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