Why Did Apple Launch A Foldable Phone? Understanding The Economics Behind It

Apple entered the foldable phone segment this year with the launch of iPhone Duo, its biggest physical change in design since the first iPhone. Its starting price of Rs 2,99,900 has already become a point of debate among smartphone users, with one segment saying it's too expensive and others claiming Apple's marketing power and influence will drive sales. With foldables accounting for just two per cent of global smartphone market, why did Apple decide to enter the segment? Here's the economics.

Why A Foldable Phone Now?

Apple, like many other smartphone makers, has seen the premium tier plateau. Most of the phones have rectangular designs, though internal hardware has been evolving every year, which makes justifying the price increase difficult. A large section of the smartphone users doesn't use PC-like features that are available in their devices. A foldable seeks to change that.

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The novel design could help re-establish the high-end smartphone market. Plus, foldables are marketed as having two phones (or at least two displays) so that they stand out in a sea of phones. They are the attention getters.

"Whenever something is exclusive, limited and luxurious, automatically consumer psychology wants it," Nabila Popal, a director at IDC, a market research firm, told The New York Times. "It's like handbags. Why is someone buying a Chanel versus that? It's not because of the leathers. It's to show that they have a Chanel and they can afford it."

A device with 7.6-inch display (when opened) can also replace your tablet, thereby allowing seamless media consumption.

Further, the prices of electronic goods are going up steeply due to industrywide chip shortage driven by the AI boom, so a foldable can give people an extra reason to upgrade.

IDC believes iPhone Duo could help the sale of foldable phones to grow by 12 per cent (to 22.9 million units) and help recover the losses somewhat.

A Hard Sell, Even For Apple

Tech lovers are used to seeing Apple comfortably selling its devices, even at prices that are much higher than the market prices. So, some people believe the iPhone Duo will also sail through.

But industry experts are skeptical. Dan Frommer, a writer for tech research publication The News Consumer, says people are used to seeing vertical content on social media platforms.

"They've been used that way for 19 years now. What would you actually want a square, big screen for?" he told the NYT.

But he also agrees that when Apple makes something, there's an allure to it. Only time will tell if that will translate into increase in sales this year as the gamble is bigger and price, even steeper.