Samsung Electronics is planning to launch the Galaxy S23 FE version in the fourth quarter. Recently, market rumors suggest that Samsung will apply a similar strategy to the Z series foldable phones, launching an FE (fan edition) version in 2024. However, mobile phone channel sources believe that considering factors like the foldable phone market, product, and user structure, the probability of an FE version for the Z series in the short term is extremely low and wouldn't mean much.
Looking at the development of foldable phones in Taiwan, Samsung introduced the first foldable phone in 2019. Starting in 2020, it slowly took foldable phones from an exquisite niche product to a viable mainstream option. From 2020 to 2022, foldable phone shipments expanded by over 15 times. Its penetration rate in the high-end section (models with prices above US$600) reached 13%. It is estimated that the penetration rate in the high-end market will exceed 30% by 2025.
Globally, driven by efforts from companies like Samsung, Xiaomi, Oppo, and others, the total shipments of foldable phones in 2023 have a chance to approach 20 million units, growing over 50% compared to around 13 million units in 2022.
As the demand for foldable phones continues to expand, if Samsung can apply the same strategy as its S series products, which is launching a downgraded FE version based on the existing Fold and Flip models, it seems to lead to better sales performance due to a more diverse and appealing product lineup price-wise. This is considered the main reason why Samsung is expected to release an FE version of foldable phones.
However, sources in the retail channels pointed out that the probability of Samsung launching an FE version of foldable phones right now is extremely low, and that a downgraded version would not significantly help retailers boost sales. The reasons are as follows:
1. The natural limitations of foldable phones
Currently, the sale prices of foldable phones fall between NT$50,000–70,000 (approx US$1,567–2,200 ). The high price is not just due to the product positioning and the production volume not reaching the economic scale. The complex hinge design and the use of more expensive flexible OLED panels are the main reasons why the prices are so high.
Key components like hinges, panels, and processors make up over 60% of the total end cost of the phone. On top of that, there are no alternative options for hinges and panels right now. If an FE version merely reduces memory and battery capacity, it wouldn't be very practical and it would be hard to differentiate its price from the regular version. If Samsung were to further upgrade the processor and replace the casing with plastic or similar materials, the product would lack visual appeal.
2. Market considerations
Even if foldable phone shipments did reach the aforementioned 20 million unit threshold in 2023, compared to the annual smartphone shipment volume of nearly 1.2 billion units, it still accounts for less than 2%. This shows that foldable phones are still in the introduction stage of their product life cycle. Their primary users are tech enthusiasts and high-end product users who are less price-sensitive.
If an FE version foldable phone is introduced and manages to offer a similar average price to an existing flagship regular smartphone, it may have a chance to expand its target user group and boost sales. However, due to the factor mentioned above, the probability of existing flagship phone users switching to buy a downgraded FE version foldable phone still appears to be quite low.
3. It goes against the company's current strategy
Samsung has already stated clearly that in an era of high inflation and a highly mature smartphone sector, the hardware specifications and cost-performance ratio of a single product are no longer the key factors that attract purchases. Instead, whether or not you can provide consumers with immersive experiences and differentiated customized services is the critical factor that determines which companies can succeed in the market.
As competition in the smartphone industry shifts from traditional spec battles to brand battles, Samsung's future mobile phone business strategy will focus on distribution channel adjustments. The aim is to leverage the customer traffic of existing centralized shopping malls and department stores to enhance sales momentum and customer satisfaction.
Additionally, Samsung will increase cross-industry brand collaborations, combining mobile phones with industries like fashion, trends, and music. This will serve as a language to communicate with consumers and allow the younger generation to embrace foldable products.
Industry sources emphasized that for Samsung, the current approach to foldable phones is beyond just optimizing product design and structure, reducing component costs, and reinforcing sales through branding. Because Fold users are mostly male and Flip users are mostly female, overcoming the gender boundaries of its products is also something Samsung needs to consider.
Lastly, finding the truly unique "killer applications" for foldable phones and making the user experience more consistent when switching between the internal and external screens remain challenges that Samsung needs to overcome.
Article translated by Jack Wu
