Picture the life of Samsung hardware engineers: Day after day, they toil at the cutting edge, devising almost inconceivable ways to defy physics. Components are shrunken, twisted, bent against their will. And then their work is unveiled to the world: the Samsung Galaxy Z Fold 7, an unfathomably thin folding smartphone. The company eagerly awaits the reaction of American smartphone buyers. “Meh,” they say.
Harsh? Maybe. But the sales won’t lie. At this point, I don’t know what it would take for Samsung Electronics Co. to engineer its way to a bigger slice of the US market, where Apple Inc. has a 56% share compared with Samsung’s 25%. The consumer lock-in of iOS and the Apple product range is just too great. People love their iPhones.
And yet, ask a Wall Street investor and she’ll tell you the iPhone segment is tired. Revenue growth (globally) has softened — 1.9% in the last quarter, down 0.8% in the all-important holiday quarter before that. The predicted upgrade “supercycle” from artificial-intelligence features has failed to materialize because they are delayed. That’s had some close observers half-heartedly questioning Chief Executive Officer Tim Cook’s position. He can quiet at least some of that talk with the coming folding iPhone, which, according to Bloomberg News’ Mark Gurman, is expected by the end of next year. That’s a long way off but not too long. From a hardware standpoint at least, Samsung’s Fold 7 is a blueprint for where the iPhone can and will go next.
The Korean giant’s foldable efforts began in 2019 with the introduction of the Galaxy Fold. The head-turning engineering achievement was held back by obvious limitations: The screen was fragile and quickly developed a prominent crease at the fold. When closed, it was rather fat — 15.5 mm. The release was delayed after reviewers found severe reliability issues. The devices have improved since, but the foldable market is still less than 2% of the overall smartphone pool, CCS Insight’s Ben Wood estimates — 22 million foldable units sold in 2024.
But with the Fold 7, announced at an event in Brooklyn earlier this month, there’s more than a whiff of a suggestion that Samsung has made a foldable phone that everyday users might finally find appealing. The device has been well received in review circles. The $2,000 price tag is huge, granted, though that can be heavily discounted with trade-ins and other perks. And again, it’s remarkably thin: When shut, the device is only six-tenths of a millimeter thicker than the latest iPhone 16 Pro.
None of this alters the challenge, however, which is that anyone who might be tempted away from the iPhone has too many practical considerations that overrule the novelty or utility of a folding phone. The years of photos, videos and messages; the effortless syncing with MacBooks and iPads; the commitment to never be the one who turns the group chat green. Above all, iOS’ straightforward familiarity, and the fact that Apple has never wavered on the quality of its software, is what makes the huge majority of its customers transition from one iPhone to the next without hesitation. Switching from iOS to Android is like asking someone to learn to write with their other hand. They see no compelling reason to put themselves through the effort.
Some think that AI is the force that can break Apple’s grip, given the company’s well-publicized struggle to grasp the technology’s potential. It’s one reason, in addition to tariff fears, that Apple investors have been in a tizzy since the start of the year, worried that Cupertino has been asleep at the AI wheel and has put at risk the lasting appeal of the most successful consumer product in history. Shares are down more than 14% this year.
These concerns are overblown as both a short- and medium-term threat. No AI company is likely to build a device that competes with the iPhone, given the supply chain mastery required, within at least the next five years or longer. There’s little to worry about from existing players, either. While watching Samsung’s keynote presentation to launch the Fold 7 and other new devices, it was notable that for all the talk of Apple’s intense struggle to introduce AI to the iPhone, Samsung hasn’t exactly achieved much to get truly excited about either. The standout AI functions were created by Google, a company that aims to get its AI into as many affluent hands as possible, which means making much of the functionality work on the iPhone as well. In addition to this, the most impressive AI functions on Samsung devices require sending data to the cloud — something Apple has been steadfastly opposed to for privacy and performance reasons.
That’s not to say Apple’s AI problem isn’t urgent. Seasoned Apple watchers rightly consider the recent fumbles an embarrassment. However, what investors seem to be overlooking is that Apple is on the cusp of a once-in-a-decade moment. The iPhone is about to receive a genuinely significant upgrade, a giant leap from the incremental changes consumers have grown accustomed to in recent years.
The last time Apple did this, with the all-screen iPhone X in 2017, analysts underestimated the consumer appetite to drop $1,000 on a smartphone. They shouldn’t make the same mistake again — a foldable iPhone is expected to go for $2,000 or more, from which the company is expected to enjoy strong margins. Volumes may be low at first but, from the offset, “the allure of a folding iPhone would immediately lift the market by many millions,” Wood said. Investors should also consider what happened when Apple introduced its “Max” models with larger screens in 2014, which some at the time considered to have niche appeal. “Apple was late in launching a large form factor compared to Samsung and other manufacturers,” wrote analysts at Consumer Intelligence Research Partners. “Now, large-format displays account for over one-third of Apple iPhone US unit sales.”
There’s a small chance the folding device will eat into other product lines, most obviously the iPad, though Apple has already started to reposition that device as a small computer rather than a large smartphone. There were cannibalization fears with the iPhone X, too, but its introduction led to the average selling price increasing by $118 over the subsequent two years, according to CIRP’s weighted sales data (Apple has stopped disclosing its own figures). And, with more users carrying larger screens on the go, Apple can expect a bump in subscriptions to its streaming and gaming services.
All of this amounts to a real upgrade supercycle, if not with Apple’s first foldable next year, certainly with the iterations to come. I’m confident it won’t take much to persuade a great number of Apple users to start buying what ultimately amounts to one device for the price of two.
Harsh? Maybe. But the sales won’t lie. At this point, I don’t know what it would take for Samsung Electronics Co. to engineer its way to a bigger slice of the US market, where Apple Inc. has a 56% share compared with Samsung’s 25%. The consumer lock-in of iOS and the Apple product range is just too great. People love their iPhones.
And yet, ask a Wall Street investor and she’ll tell you the iPhone segment is tired. Revenue growth (globally) has softened — 1.9% in the last quarter, down 0.8% in the all-important holiday quarter before that. The predicted upgrade “supercycle” from artificial-intelligence features has failed to materialize because they are delayed. That’s had some close observers half-heartedly questioning Chief Executive Officer Tim Cook’s position. He can quiet at least some of that talk with the coming folding iPhone, which, according to Bloomberg News’ Mark Gurman, is expected by the end of next year. That’s a long way off but not too long. From a hardware standpoint at least, Samsung’s Fold 7 is a blueprint for where the iPhone can and will go next.
The Korean giant’s foldable efforts began in 2019 with the introduction of the Galaxy Fold. The head-turning engineering achievement was held back by obvious limitations: The screen was fragile and quickly developed a prominent crease at the fold. When closed, it was rather fat — 15.5 mm. The release was delayed after reviewers found severe reliability issues. The devices have improved since, but the foldable market is still less than 2% of the overall smartphone pool, CCS Insight’s Ben Wood estimates — 22 million foldable units sold in 2024.
But with the Fold 7, announced at an event in Brooklyn earlier this month, there’s more than a whiff of a suggestion that Samsung has made a foldable phone that everyday users might finally find appealing. The device has been well received in review circles. The $2,000 price tag is huge, granted, though that can be heavily discounted with trade-ins and other perks. And again, it’s remarkably thin: When shut, the device is only six-tenths of a millimeter thicker than the latest iPhone 16 Pro.
None of this alters the challenge, however, which is that anyone who might be tempted away from the iPhone has too many practical considerations that overrule the novelty or utility of a folding phone. The years of photos, videos and messages; the effortless syncing with MacBooks and iPads; the commitment to never be the one who turns the group chat green. Above all, iOS’ straightforward familiarity, and the fact that Apple has never wavered on the quality of its software, is what makes the huge majority of its customers transition from one iPhone to the next without hesitation. Switching from iOS to Android is like asking someone to learn to write with their other hand. They see no compelling reason to put themselves through the effort.
Some think that AI is the force that can break Apple’s grip, given the company’s well-publicized struggle to grasp the technology’s potential. It’s one reason, in addition to tariff fears, that Apple investors have been in a tizzy since the start of the year, worried that Cupertino has been asleep at the AI wheel and has put at risk the lasting appeal of the most successful consumer product in history. Shares are down more than 14% this year.
These concerns are overblown as both a short- and medium-term threat. No AI company is likely to build a device that competes with the iPhone, given the supply chain mastery required, within at least the next five years or longer. There’s little to worry about from existing players, either. While watching Samsung’s keynote presentation to launch the Fold 7 and other new devices, it was notable that for all the talk of Apple’s intense struggle to introduce AI to the iPhone, Samsung hasn’t exactly achieved much to get truly excited about either. The standout AI functions were created by Google, a company that aims to get its AI into as many affluent hands as possible, which means making much of the functionality work on the iPhone as well. In addition to this, the most impressive AI functions on Samsung devices require sending data to the cloud — something Apple has been steadfastly opposed to for privacy and performance reasons.
That’s not to say Apple’s AI problem isn’t urgent. Seasoned Apple watchers rightly consider the recent fumbles an embarrassment. However, what investors seem to be overlooking is that Apple is on the cusp of a once-in-a-decade moment. The iPhone is about to receive a genuinely significant upgrade, a giant leap from the incremental changes consumers have grown accustomed to in recent years.
The last time Apple did this, with the all-screen iPhone X in 2017, analysts underestimated the consumer appetite to drop $1,000 on a smartphone. They shouldn’t make the same mistake again — a foldable iPhone is expected to go for $2,000 or more, from which the company is expected to enjoy strong margins. Volumes may be low at first but, from the offset, “the allure of a folding iPhone would immediately lift the market by many millions,” Wood said. Investors should also consider what happened when Apple introduced its “Max” models with larger screens in 2014, which some at the time considered to have niche appeal. “Apple was late in launching a large form factor compared to Samsung and other manufacturers,” wrote analysts at Consumer Intelligence Research Partners. “Now, large-format displays account for over one-third of Apple iPhone US unit sales.” There’s a small chance the folding device will eat into other product lines, most obviously the iPad, though Apple has already started to reposition that device as a small computer rather than a large smartphone. There were cannibalization fears with the iPhone X, too, but its introduction led to the average selling price increasing by $118 over the subsequent two years, according to CIRP’s weighted sales data (Apple has stopped disclosing its own figures). And, with more users carrying larger screens on the go, Apple can expect a bump in subscriptions to its streaming and gaming services.
All of this amounts to a real upgrade supercycle, if not with Apple’s first foldable next year, certainly with the iterations to come. I’m confident it won’t take much to persuade a great number of Apple users to start buying what ultimately amounts to one device for the price of two.
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