Galaxy Note Pro: Why Samsung should sell a $1500 phone

Galaxy Note Pro: Why Samsung should sell a $1500 phone

What happens when you unleash Samsung's design, scale and dominance in the ultra high-end market?

In 2014, Samsung achieved something that few in the working tech media had the remaining capacity to feel: surprise. It did this at a relatively subtle launch event in New York City, inside the building that would become its flagship showcase, Samsung 837.

The product was the Galaxy Note Edge, which debuted alongside the company's real fall flagship, the Note 4. The Note Edge was essentially a Note 4 with one side of its display a cascade of OLED and glass that, impossibly, met the metal bezel and disappeared. It was amazing and ridiculous and, unsurprisingly, not particularly useful. But it didn't matter: people coveted this aspirational device, which was more expensive and harder to obtain than anything else from Samsung at the time. More importantly, the curved display technology that debuted in the Note Edge has since informed and, now, completely altered the trajectory of Samsung's phone business. You can't buy a Galaxy flagship without a curved OLED display.

The Galaxy Note Edge was an experiment that turned into a sea change for Samsung's mobile future.

At the time, the Note Edge was little more than an experiment, a technology demo; the company didn't market the phone much, largely because you couldn't really do much with that edge screen, but also because the nascent manufacturing process was finicky, and production notoriously slow. It would take until 2015, with the much more mainstream (and symmetrical) Galaxy S6 edge before the kinks were worked out and curved screen phones could be built at scale.

I think about all this in the run-up to both the Galaxy Note 8 and iPhone 8 launch because recently there's been a renewed focus on the aspirational high end of the market. The Galaxy Note 8 alone is expected to cost close to $1000 (though more reasonably closer to $900), while the iPhone 8, or iPhone Pro as some are calling it, could fetch up to $1500 in its most expensive configuration.

In a piece for iMore, Rene Ritchie makes the argument for why the iPhone 8 will cost so much:

iPhone 8 — or whatever Apple calls the higher-end model this year — is another attempt to fill a space, a more expensive and more premium one. Serendipitously, the relatively smaller size of the higher-end market also lets Apple embrace newer and more advanced technologies — the ones that are harder to scale — sooner.

That's because Apple makes and sells millions of iPhones a year, and needs every version to be identical, even if it introduces some new technology from a partner like Samsung, or Broadcom, or Qualcomm, that's difficult to manufacture at scale. The argument here is that if the iPhone 8 introduces something like behind-the-glass fingerprint sensing, inductive charging, or bezel-less OLED screens, it has to be able to procure enough components to satisfy the market, which last year was above 200 million units.

Apple and Samsung produce phones at scales that are not matched anywhere else in the mobile ecosystem, though OPPO and Vivo are quickly catching up.

But it will be incredibly difficult to outfit a phone with a handful of brand new (for Apple) and expensive hardware components that would be sold for $850 at a 35% margin. It's just not going to happen. So, in order to meet that internal requirement for high margins and higher profits, Apple will be forced to price the iPhone 8 considerably higher than any model before it — perhaps even as high as $1500. It won't be able to make many, so it will have to earn more from each one it sells. Make sense, right?

Well, let's move that argument over to the Android space, and investigate the same potential move by Samsung. No other company in the Android ecosystem produces and sells as many phones as Samsung. No other company makes as much profit as Samsung. Practically no other company can match the scale required to build and sell hundreds of millions of phones every year (though one could argue that Huawei and LG could if the demand required it of them), nor does any other company, including Apple, control the production of as many of the components that go inside the phones as Samsung.

That's why Samsung should build a Galaxy Note Pro.

A Galaxy Note Pro would do things my chimp brain can't even dream up.

It took me a while to get here, mainly because setting the stage is important in an argument like this. The Galaxy Note series is already aspirational, and certainly the most expensive in Samsung's lineup, but in recent years the line has converged, both aesthetically and technologically, with flagship Galaxys, to be separate in S Pen alone. Sure, the Galaxy Note 8 is expected to have a dual camera setup and more RAM, but from everything we've seen so far it looks to be both iterative and familiar.

A Galaxy Note Pro, however, would be expensive. It would include technologies that are hard to produce at scale, like an under-the-glass fingerprint sensor, impressive speakers, and a beautiful, energy-efficient (and VR-ready) 4K display. Its cameras would do more than just produce depth effects, but would use mirrors and prisms to extend focal length, or improve low-light capabilities, without increasing thickness. It may even fold. It would do things my chimp brain can't even dream up.

Samsung is singularly capable in a sea of me-too and low-margin Android manufacturers of producing an honest-to-goodness $1500 phone that people would not only want to buy, but be able to buy. Other companies could surely piece together prototypes, and maybe produce a few thousand units — just look at RED's new Hydrogen One phone for an example of such excess — but Samsung could easily produce a few million Galaxy Note Pro units without risking so much as a cautionary note on its quarterly earnings report. The Galaxy Note Pro would be the dream phone people could actually buy at Verizon, not some special edition Porsche Design Mate 9 that no one asked for.

On the marketing side, Samsung is the only company capable of producing in people a burning need to have this unattainable thing. In the first quarter of 2017, it sold 22.8% of all smartphones worldwide, a number slightly higher than its three major Android competitors — Huawei, Vivo, and OPPO — combined. It is on track to report its most profitable quarter ever, and continues to be, for many people not particularly well versed in the tech space, the only company selling Android phones; it's not uncommon to meet people who identify Android as 'Galaxy'. A Galaxy Note Pro would sit atop that success story.

Moreover, the Galaxy Note Pro would inform future phones in Samsung's lineup, giving fans a realistic impression of what to expect in the following year, at a much more accessible price — and with all the kinks worked out.

(There's a separate semantic argument to be made that the Note name, given the recent damage to its reputation and its meandering drift towards mainstream appeal in recent years, wouldn't be appropriate for such a phone, and it should just be called the Galaxy Pro. Samsung does have a history of using the Pro moniker in its tablet, Chromebook and laptop lineup, so it would make sense to see it on the phone side, too.)

Many of the problems that Apple is addressing with the so-called iPhone 8 — edge to edge screens, retina unlock, wireless charging — Samsung solved years ago. A Galaxy Note Pro would be an opportunity to move back into a position of authority, to build on the years of experience it took to get from the Note Edge to the Galaxy S8. Those two phones don't look anything alike, but that's because it took Samsung half a decade to figure out exactly what people want. Now that it knows, it can continue to lead.