Cheap Flip?
According to local Korean trade press, Samsung Electronics has initiated a program to develop a lower priced foldable smartphone for release in 2024. With the concept of bringing the cost of a foldable down to 1m won (~$770 US) from the $960 to $1,550 (1.5m to 2m won) that such Samsung foldables cost last year by focusing on core functions, the company is hoping to widen its share of the foldable smartphone market and increase its own share of foldables across its smartphone lines.
As Samsung and other smartphone brands face competition from lower priced but fully featured Chinese smartphone brands, the impact on flagship models has been felt over the last two+ years, with Samsung’s best-selling phones being its Galaxy A series rather than the flagship Galaxy S series. The Galaxy A series is priced between $180 and $450, while the Galaxy S Series is priced between $1,000 and $1,200 (Initial price). While Samsung is expected to ship 15m foldables this year, up substantially from the 8m shipped last year, it is still under 6% of Samsung’s expected smartphone shipments this year.
However with a share of just under 90% of the foldable market last year, Samsung needs to develop even larger volumes to maintain that very dominant share as other brands enter the market, and that would require a lower priced foldable to appeal to the more price conscious smartphone buyer as Samsung discovered when it lowered the price of the 2021 Galaxy Z Flip foldable to $999 last year. That ~$200 price reduction over the previous year’s Galaxy Z Flip model made last year’s Galaxy Z Flip the best-selling foldable model with a 52% share of the market.
While we expect foldable display production costs to continue to decline, a less feature-rich foldable might be the key to bringing out a mid-priced foldable that will appeal to the top end Galaxy A Series customer without cannibalizing the more premium priced Galaxy Z Flip and Galaxy Z Fold. As Apple is expected to enter the foldable market around the same time (2024), we expect Samsung’s ‘other’ motive for developing such a device would be to lessen the impact of Apple’s (AAPL) entry into the foldable market, which would likely have the most impact on the more expensive Samsung Galaxy foldables. It will be tricky to create a less expensive device that still has enough features to warrant purchase without making it so attractive that it cuts into the Z Flip and Z Fold market, but we expect Samsung will do extensive customer testing before it makes such a step and will have a better understanding of the ‘foldable customer’ by then.
As Samsung and other smartphone brands face competition from lower priced but fully featured Chinese smartphone brands, the impact on flagship models has been felt over the last two+ years, with Samsung’s best-selling phones being its Galaxy A series rather than the flagship Galaxy S series. The Galaxy A series is priced between $180 and $450, while the Galaxy S Series is priced between $1,000 and $1,200 (Initial price). While Samsung is expected to ship 15m foldables this year, up substantially from the 8m shipped last year, it is still under 6% of Samsung’s expected smartphone shipments this year.
However with a share of just under 90% of the foldable market last year, Samsung needs to develop even larger volumes to maintain that very dominant share as other brands enter the market, and that would require a lower priced foldable to appeal to the more price conscious smartphone buyer as Samsung discovered when it lowered the price of the 2021 Galaxy Z Flip foldable to $999 last year. That ~$200 price reduction over the previous year’s Galaxy Z Flip model made last year’s Galaxy Z Flip the best-selling foldable model with a 52% share of the market.
While we expect foldable display production costs to continue to decline, a less feature-rich foldable might be the key to bringing out a mid-priced foldable that will appeal to the top end Galaxy A Series customer without cannibalizing the more premium priced Galaxy Z Flip and Galaxy Z Fold. As Apple is expected to enter the foldable market around the same time (2024), we expect Samsung’s ‘other’ motive for developing such a device would be to lessen the impact of Apple’s (AAPL) entry into the foldable market, which would likely have the most impact on the more expensive Samsung Galaxy foldables. It will be tricky to create a less expensive device that still has enough features to warrant purchase without making it so attractive that it cuts into the Z Flip and Z Fold market, but we expect Samsung will do extensive customer testing before it makes such a step and will have a better understanding of the ‘foldable customer’ by then.
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