I think a very coarse but useful way (for me at least) to think of consumer goods is that they tend to sort out into 3 markets: mass market, premium, luxury. In

I think a very coarse but useful way (for me at least) to think of consumer goods is that they tend to sort out into 3 markets: mass market, premium, luxury. In general, mass market is the 80-90% solution for most people, in which products are commodities and the big players tend to compete on price. Mass market products tend to have very low margins but make up for it with high volume. The premium market is almost all of the remaining 10-20%. Premium should (ideally, but not always in practice) mean that nothing about the product is compromised or half-assed, while still costing not-insane amounts of money compared to the mass market alternatives. A consumer pays a premium price because they like the thing and/or they like being able to assume that it's premium quality even with respect to things they don't know enough to care about. Premium products tend to have fatter margins and lower volume than mass market products, but generally have the greatest success if they can justify themselves to premium consumers. Competitive advantage within a premium market is often value, ironically- best bang for the buck overall, there's just an assumed higher cost of entry vs mass market. The luxury market is exactly as Despegar wrote. Tiny companies selling very small quantities of tremendously expensive baubles. Value is almost meaningless here. It's the opposite of mass market- it's the other extreme of trying to maximize (margin * volume). I think the three tiers of mass market/premium/luxury represent local maxima that companies naturally gravitate towards by applied market forces, with perhaps a global maximum somewhere in the premium range. These sweet spots represent healthy places for businesses to be, for the companies, their customers, and their shareholders. For example, the auto industry: Toyota and VW are mass market, Lexus and Audi are premium, and Bugatti and Ferrari are luxury. Steak places: Sizzler and Black Angus are mass market, Ruth's Chris and Flemings are premium, and some place in Hong Kong that doesn't advertise or even have a name and that I will sadly never learn about or be invited to is luxury. All of which is a very long-winded way for me to say that yep, 1.4bil devices is definitely not luxury. Mostly premium (in the higher-cost-of-entry-but-better-long-term-value sense) but still a huge number. Vertu was luxury, and they completely sucked on top of that.