Wednesday, April 17, 2024

Exploring the Evolution and Challenges of Foldable Smartphones

Kantar reveals insights into the increasingly competitive Foldable Smartphone category through its latest Worldpanel ComTech study. The study explores current winners, the effect that the category is having and is set to have on the wider industry, drivers to Foldable adoption and intention to buy.

Twenty-six years ago, Motorola released the world’s first flip mobile phone. It was lightweight, compact, and cost $1,000 (approx. $1,600 in today’s value). Last month Samsung released the latest iteration of its Foldable range. The Galaxy Z Flip 5 is lightweight, compact and costs $999. The devices are more adjoined in their differences than their similarities, yet both faced the same fundamental challenge; convincing customers to part with their money and adopt a different mobile form-factor.

The Foldable Smartphone category consists of Fold and Flip devices. Fold Smartphones feature displays that can be folded inwards, allowing the device to transform from a traditional sized screen to a larger tablet-sized display. Flip Smartphones have a design reminiscent of the traditional flip phones of the past. These devices fold in half, offering a smaller external display when closed. Kantar Worldpanel ComTech report that Flip devices account for 67 percent of all Foldable Smartphones owned, Fold account for 33 percent, across the European 5, US, and Australia.

Adoption of Foldable Smartphones remains low, this may be attributed to whether a consumer need is being addressed and whether it’s enough to drive social copying. Just 1 percent of all Smartphone owners own a Foldable phone across the European 5, US and Australia. Whilst adoption has jumped +60 percent year-over-year, the category remains at the bottom of the S-shaped sigmoid curve (a function to describe the introduction, development, and maturity of new technological innovations).

1 Percent of Smartphones Owned are Foldable

Within the small market, Samsung dominate, holding 90+ percent volume share. Having launched its first Foldable Smartphone in 2019 it is benefitting from a ‘first mover’ advantage, notably ahead of competitors in hardware, building on a generation series each year since launch and is dictating market pricing. Yet Samsung’s ‘first mover’ advantage was not without its challenges; its first-generation Fold received criticism for its reliability and longevity. Any negative reviews can affect future sales for not just Samsung Foldables but this form-factor as an offering overall.

Apple – A Notable Omission

More OEMs are entering the Foldable form-factor creating healthy competition, which is crucial for category building. Huawei, Motorola, Oppo, Vivo and Google have all entered the space with various designs.

However, there remains one notable omission from the pack – Apple.

With 37 percent of Smartphone installed base shares, Apple cannot be ignored as a competitor that drives and sustains trends, whether that’s the iPhone, Apple Watch, or AirPods. Will Apple join this form-factor? 25 percent of iPhone owners with an intention to purchase a new phone in the next 6 months state that they are considering purchasing a Foldable phone, the majority also want to remain loyal to Apple (~90 percent loyalty rate). Providing the current 180 million iPhone owners with an Apple Foldable option would certainly help mitigate churn to Android OEMs currently offering a Foldable option and increase overall Foldable adoption.

55 percent of Foldable owners moved back to a non-folding phone

As the Foldable category begins to mature, existing owners are beginning to upgrade. Of these early Foldable adopters who have purchased a new phone in the last 12 months, just 45 percent of owners went on to purchase another Foldable phone, 55 percent moved back to a conventional non-folding Smartphone. It is important to prefix that this behaviour is among a very niche customer group, and we are analysing the behaviour among the earliest of Foldable adopters, time will provide a more representative view of form-factor switching behaviour.

However, this retention rate is potentially the first tell on what’s to come in absence of a step change in adoption. Consumers that returned to a non-folding Smartphone were willing to pay a premium price point for their new device. Top models purchased include; Galaxy S23 Ultra, Galaxy S22 Ultra, Pixel 7 Pro, and iPhone 14 Pro Max. This behaviour indicates that the high price of Foldable phones is not the barrier driving form-factor loyalty. Delving into the net drivers of satisfaction amongst current Foldable owners; frequency of software updates, after-care support, and battery life are all areas that drive low levels of satisfaction compared to ‘super-premium’ non-Foldable Smartphone owners. Consumers are highly influenced by advocacy and word-of-mouth. The effect disgruntled Foldable owners are having on the category cannot be overstated.

The Foldable market has ample room for growth, yet it remains to be seen if it can move from a niche technology toward mass adoption. New entrants and innovations will undoubtedly support growth, improving build quality and reducing price (no new Foldable has yet launched sub $999). Moreover, as additional consumers buy, less will feel the first-move anxiety associated with adopting a new technology.

Kantar Worldpanel ComTech’s continuous monthly tracking of the Foldable Smartphone market enables accurate sales forecasting, intended versus actual behaviour, manufacturer growth and more. Reach out to understand and track the Smartphone market in further detail.


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