If Apple (NASDAQ:AAPL) wasn’t feeling the pressure over folding smartphones in the days after Mobile World Congress 2019, the company has to be now. Samsung and Huawei are both ready to release uber expensive flagship folding smartphones, while other Android smartphone makers have prototypes. Now reports have emerged that Samsung is working on two additional new folding smartphones, even as Chinese retailers begin slashing iPhone prices for the second time this year. All of this begs the question: When will we see a folding iPhone?
Until late last year, folding smartphones were hardly on the radar. The focus was on keeping up with Apple, and how to deal with a market that was maturing.
What a difference a few months make. Samsung officially announced the Galaxy Fold at its Unpacked event in February, and just days later, MWC 2019 saw multiple folding smartphones showcased, including the $2,600 Huawei Mate X. The buzz over folding smartphones hasn’t let up.
Folding Smartphones Are Ramping Up
With no signs of a folding iPhone anytime in the near future (other than a patent filed earlier this year), the folding smartphone situation is rapidly becoming worse for AAPL. Yesterday, Bloomberg reported that with the Galaxy Fold launching in April, Samsung has two more folding smartphones in the pipeline.
In addition, rumors are heating up that Lenovo is preparing to release a $1,500 folding Motorola Razr smartphone this summer. That’s bad news for AAPL on multiple fronts. The timing of the Razr launch would mean Apple’s fall iPhone launch would be coming on the back of yet another high profile folding smartphone. Motorola sells a fraction of the smartphones Apple or Samsung do, but it’s a top four player in the U.S. market. The original Motorola Razr flip phone is one of the most popular mobile phones of all time. The Motorola Razr V3, which was released in 2007, sold over 130 million units, making it the best-selling flip phone of all time.
The combination of nostalgia, cool new tech and a price expected to be hundreds of dollars less than the larger folding smartphones from Samsung and Huawei could make this new Motorola Razr a hit as well.
Promoting Folding Technology
The smartphone industry is ramping up to support folding devices. Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google has already incorporated support for folding devices in Android. Meanwhile, Samsung is reported to be actively shopping its folding display technology to other companies, including Google and Apple. The company currently has production capacity to push out 2.4 million folding displays yearly, but could ramp that up to 10 million units.
Where’s the Folding iPhone?
Apple is in a bit of a tough spot at the moment, a position it’s not accustomed to being in. The company set a new precedent for premium smartphone pricing with the iPhone X in 2017, and topped that with the iPhone XS Max last fall. With sales softening, the company is relying on average sale price (ASP) to drive iPhone revenue, which is the primary driver of Apple stock.
But the iPhone is beginning to fall behind. It’s no longer the camera leader. It started the smartphone screen notch trend with the iPhone XS, but after a year of copying, Android smartphone makers are moving away from the notch, making AAPL’s design look dated. Folding smartphones are becoming the new ultra-premium device. It will be hard for Apple to maintain iPhone revenue growth through rising ASP if its smartphones are no longer seen as the best.
The company has already had to aggressively market trade-ins to reduce the purchase price of new iPhones, and Reuters is reporting that Chinese retailers have begun slashing iPhone prices for the second time this year.
A folding iPhone may be the only way out of this situation, but it has risks. For one, AAPL would seem like a follower — a position the company hates to be in. The category is also brand new and there’s no guarantee consumers are actually going to buy folding smartphones, at least after the initial rush. There are also technical issues still to be resolved. Those Samsung folding screens are plastic. That means potential for scratches, and the company is worried about creasing.
Enter Corning (NYSE:GLW). Apple has used Corning’s Gorilla Glass in its devices for a decade, and recently invested $200 million in the American company. Corning says it is actively working on foldable glass for smartphone displays, but the end results may be a few years away.
That may well be the key to when Apple will release a folding iPhone. Rather than adopting the same folding Samsung displays everyone else is, the company could wait and take any lumps it has coming for a few years. If the folding smartphone dies off, nothing lost. If it takes off, Apple would be positioned to be first to market with a folding iPhone protected by glass — an innovation rather than simply following the herd.
Either way, folding smartphones could mean the next year or two will be bumpy ones for iPhone sales.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.