Phonemakers Not Named Apple Are in Love With Foldable Phones

(Bloomberg Businessweek) -- For years, every Apple iPhone event seemed like a radical step forward for smartphones, sending waves of people to upgrade and competitors scrambling to catch up. That urgency has faded as the pace of change in smartphones has slowed, whether measured by the form or function of each new device. The iPhone 15 that Apple Inc. introduced on Sept. 12 doesn’t look much different from the iPhone 12 from 2020.

As a result, every major phonemaker not named Apple sees an opportunity to steal some of the excitement normally reserved for the undisputed champion in high-end smartphone design. Largely, they’ve settled on the same strategy—phones that fold. “Foldables are the future,” says Billy Zhang, president of overseas sales and services at the Chinese company Oppo, the world’s fourth-largest smartphone maker by shipments.

The pitch is simple: Get double the screen from a device the same size as a regular smartphone. With phones often serving as general-use computing devices, this change can mean better multitasking, more comfortable typing and a more natural way to read. Foldable phones are also a way for phonemakers to distinguish themselves from competitors, and to entice customers into spending extra for premium features, which could eventually mean better margins.

Phonemakers are in dire need of something new. The global smartphone market fell 7.8% in the three months ended in June, the eighth consecutive quarter of year-over-year contraction, according to research company IDC. Foldables won’t turn that around anytime soon—IDC estimates they’re only 1% of global shipments—but they’re set to grow by more than 50% this year.

Samsung Electronics Co., the world’s biggest smartphone vendor, has poured more than a decade’s worth of investment into foldables. It’s invented hinges, displays and batteries. The additional complexity drives up costs; executives in the industry say hinges have to be effectively redesigned with each new model, for instance, because the phones get thinner. Despite this challenge, Samsung, which began selling foldables in 2019, began pricing some models at less than $1,000 in 2021, the first time a premium foldable was available below that threshold. Its $999 Galaxy Z Flip has helped it increase foldable sales with every generation since. It expects to sell its 30 millionth foldable phone sometime this year.

People who are on their second foldable are happier with their device than total newcomers, according to Samsung, suggesting that familiarity helps develop loyalty among users. The company is looking to introduce a less expensive foldable device, according to the head of its mobile business, TM Roh. “We believe more customers will begin choosing foldables to meet today’s ever-changing lifestyles, and with that, more companies will also enter the market,” Roh says. “A healthy product category requires healthy competition.”

There’s already speculation about when Apple will get into the game. Market research company Counterpoint Research has said it expects that will happen around 2025.

Until then, everyone else has a chance to gain a foothold. Huawei Technologies Co.—China’s leading foldables brand last quarter with a half-million units sold, according to IDC data—has cranked out seven iterations in five years. Its latest, the Mate X5, doesn’t weigh any more than an iPhone 14 Pro Max, showing that foldables don’t have to be heavier than conventional devices. China’s Honor Device Co., the brand Huawei spun off in 2020, is spending 1 billion yuan ($137 million) on research and development per foldable generation, says Chief Executive Officer George Zhao. He says the investment is helping transform the devices into more serious competitors. “A couple of years ago, it was almost impossible to reduce the thickness and weight of a foldable to match those of a traditional bar phone,” Zhao says.

Conventional smartphones still have the edge in accommodating larger camera arrays. They can also have perfectly uniform screens, whereas every foldable has a slight crease. Customers also express concerns about durability, and many apps are not yet properly adapted to switch between open and closed modes.

Eiji Araki, an executive at a Japanese tech company, switched from a conventional smartphone to Google’s Pixel Fold for the first time this summer and says he’s not going back. The new device weighs a bit more than his old one, but it has turned out to be “surprisingly normal” in its folded mode, he says, “and an amazingly immersive experience when I use the phone unfolded to read books or watch videos.”

He could’ve just waited for a newer version of the Pixel 7 Pro he already had in his pocket, but he felt it was time for something new. “If you want to change your life,” he says, “why spend another thousand dollars for literally the same phone?”

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