Apple (AAPL 0.37%) has witnessed robust demand for its iPhones even as the overall smartphone market is in the soup, as reflected in the company’s results for its fiscal 2023 second quarter (ended April 1), released on May 4 .But there is a niche of the smartphone market the tech giant has yet to tap.
The Cupertino-based company is the only smartphone original equipment manufacturer (OEM) yet to launch a foldable smartphone. This space is currently dominated by Samsung, followed by Chinese OEM Huawei. Other Chinese smartphone companies like Oppo and Vivo also have a presence in the foldable smartphone market.
And now, Alphabet has joined the foldable smartphone bandwagon with the Pixel Fold. So, is Apple’s absence from this market a missed opportunity? Lets find out.
The foldable smartphone market could be huge
Market research firm IDC estimates that 14.2 million foldable smartphones will be shipped by 2022. That’s a small number considering a total of 1.2 billion smartphones were shipped last year, putting the share of foldable devices at just 1.2%.
IDC forecasts that foldable smartphone shipments could grow at an annual rate of nearly 28% over the next five years. By 2027, annual shipments could reach 48 million units, generating $42 billion in annual revenue. This puts the average selling price (ASP) of each foldable smartphone at $875. For comparison, IDC expects the ASP of the overall smartphone market to reach $376 by 2027.
It is also worth noting that foldable smartphone shipments are increasing at a difficult time. IDC expects a 1.1% decline in smartphone shipments this year, but it expects shipments of foldable smartphones to increase by an impressive 50%. When combined with the higher prices these devices command, it’s easy to see that Apple is missing out on a potentially lucrative opportunity to grow its iPhone revenue.
Apple is late to the game
Samsung is the runaway leader in foldable smartphones with a whopping 80% share by 2022. The South Korean giant is making the most of its archrival’s absence in this niche, but a survey by Counterpoint Research indicates that the customers are eagerly waiting for Apple to launch a foldable iPhone.
A consumer study conducted by a US market research firm recently revealed that Samsung is the most preferred foldable smartphone brand in the country, with 46% of respondents opting for the Korean company. Apple, which does not yet have a foldable smartphone, is not far behind as 39% of respondents chose it as their preferred foldable smartphone brand.
This suggests that if Apple were to launch a foldable smartphone today, it could win a good chunk of this fast-growing smartphone segment. The good part is that the company may be working on a foldable iPhone. The company has filed patents for a foldable device, with a recent application suggesting that the foldable iPhone could automatically fold itself in the event of a fall to protect the screens.
Meanwhile, the rumor mill also suggests that Apple is indeed working on a foldable smartphone, and that it could launch the device in 2025. Apple has not commented on the products under development, but it would not be surprising to see the company that actually released. a foldable device in the foreseeable future because of the huge profit opportunities in this space.
The good part is that even though Apple is late to the foldable smartphone game, it shouldn’t be a cause for concern. That’s because even in 2027, foldable smartphones will only have a 3.5% share of the overall smartphone market. So, Apple still has time to perfect its rumored foldable iPhone.
And once such a device hits the market, it’s no surprise to see it become a huge hit for a few simple reasons.
Why a foldable iPhone could be a hit
Foldable smartphones have a higher ASP compared to traditional form factors. The Google Pixel Fold, for example, costs $1,799. The Samsung Galaxy Z Fold 4 has a similar price tag. Since Apple enjoys tremendous pricing power in the smartphone market with the ASP of each iPhone at nearly $1,000, it’s no surprise to see consumers willing to pay a premium for a foldable smartphone from the company.
With the global foldable smartphone market expected to generate $174 billion in revenue by 2031, Apple could give its top line a significant boost if it enters the market. The company captured 50% of the global smartphone market revenue in the first quarter of 2023 thanks to its high ASP and stable shipments. It’s worth noting that Apple cornered the lion’s share of smartphone revenue last quarter despite accounting for just 21% of shipments.
A foldable iPhone could give Apple an opportunity to further increase its ASP and boost its smartphone revenue share. If the company captures half of the revenue of the foldable smartphone market by 2031, it could add $87 billion to its top line based on the above estimates. Apple sold $205 billion worth of iPhones last year, indicating that a foldable device could significantly boost revenue for Apple’s biggest product line and help this tech stock become a big winner in the long run.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Alphabet and Apple. The Motley Fool has a disclosure policy.