As a smartphone enthusiast, it’s hard not to notice the shift in the industry, and Goldman Sachs just confirmed what we’ve been seeing: mid-range smartphones are on their way out. These are the devices priced between $200–$600 (or 1,200–2,500 NIS), once the sweet spot for balancing cost and specs. But according to Goldman Sachs, this category is collapsing, with its market share expected to shrink from 35% in 2021 to just 23% by 2027.
Why? Two big reasons: the lack of exciting innovations and tighter wallets among middle-class consumers dealing with a tough global economy. As explained in their report, the gap between high-income buyers who go for premium phones and budget-conscious buyers opting for entry-level devices is growing. The result? Fewer people are buying in the middle.
Premium devices are taking over
The high-end smartphone market (priced over $600) is thriving. Its share grew from 22% in 2021 to 28% in 2023 and is projected to reach 32% by 2027. Even more striking, these premium devices will account for an estimated 74% of the industry’s revenue by then. Why? Manufacturers love the profit margins.
For example, the iPhone 11 Pro Max reportedly cost Apple $490 to produce, while Samsung’s Note 20 Ultra cost about $550. But these flagship devices are now selling for around $1,200—$200 more than a few years ago. With component costs barely rising, it’s clear manufacturers see premium devices as a cash cow, leaving little incentive to focus on mid-range options like the Galaxy S24 FE or a standard iPhone 16, which are less profitable but still expensive to make.
Budget phones hold ground
Meanwhile, budget smartphones (under $200 or 1,000 NIS) are holding steady, capturing 41–45% of the market between 2021 and 2023. This stability comes from the transition to 5G in emerging markets and a global economic climate pushing consumers toward cheaper options. Events like the war in Ukraine, conflicts in Israel and Syria, the U.S.-China trade war, and broader economic challenges continue to influence spending habits worldwide.
Overall, Goldman Sachs projects slow growth for the smartphone market: 3% in 2025, 2% in 2026, and just 1% in 2027. The reasons? A lack of innovation and longer replacement cycles. Let’s be honest—flagship models from Apple and Samsung this year don’t feel revolutionary. Early leaks about the Galaxy S25 suggest it won’t differ much from the S24, and while Apple is rumored to launch the iPhone 17, no one’s expecting groundbreaking features.
Apple’s recent struggles—missing the AI wave, its failed car project, and underwhelming sales of its Vision Pro AR headset—raise questions about how much risk they’re willing to take with the iPhone, their golden goose.
Another factor quietly reshaping the market is the rise of refurbished and used smartphones. More and more consumers are choosing two-year-old premium phones over new mid-range devices. Why spend the same amount on a mid-tier phone when you can get a pre-owned flagship with better performance and features?
Israel’s smartphone market mirrors global trends
In Israel, smartphone shipments are expected to grow by 3% in 2025, matching global trends. The market here is dominated by Samsung (40–50% market share), Apple (25–35%), and Xiaomi (15–20%). Smaller brands like OnePlus, Nothing, Oppo, Vivo, Realme, and Honor struggle to gain traction due to inconsistent import channels.
Get the Ynetnews app on your smartphone: Google Play: https://bit.ly/4eJ37pE | Apple App Store: https://bit.ly/3ZL7iNv
Xiaomi was the last brand to successfully enter the market, offering great value at lower prices, but even Xiaomi’s devices have become more expensive. Their premium models now rival Samsung’s pricing, which could drive former Xiaomi fans to look for cheaper alternatives.
The future of mid-rangers
So, what does this all mean? The mid-range segment is shrinking because it’s stuck in no man’s land. Budget phones are improving fast, premium phones are becoming aspirational status symbols, and refurbished options are eating into mid-range sales. For enthusiasts, this shift might mean fewer choices in the middle tier, but it also highlights how quickly the smartphone landscape evolves. It’s an exciting (and frustrating) time to be a fan of mobile tech.