Transcript

Apple launched its first foldable iPhone several days ago at $1,999.

That sparked a lot of discussions.

So, I dug into Apple's patent portfolio and one thing jumped out.

Apple has been working on folding display mechanics for more than a decade.

So why is now Apple releasing one?

In Apple's portfolio, you can see Apple wasn't just trying to solve some vague stuff like

maybe one day phones may fold. In particular, it was trying to solve nesting problems that come with actually when you fold a screen.

For example, when you fold the phone, the display can't just bend tightly around one fixed point.

If you want to figure out the patent details and compare that with the phone it just shipped, the link is up here.

And then, let's go back in time and see what Apple's competitor Samsung has done several years ago.

And the first ever foldable released in 2019, Galaxy Fold.

It also started at around $2000 and it measured about 17.1 mm.

Initially, its launch was delayed due to also reliability issues around the display and hinges.

So yeah, you can probably see why Apple might look at all of this and thought,

hmm, maybe this technology just wasn't ready yet.

Six years later, Samsung's Fold 7 is down to 8.9mm, almost half the thickness.

So we can see the hardware has gotten a lot better.

But is this really why now is the right time for Apple to release a foldable phone?

I wasn't convinced. So I started looking at what was happening in the rest of the smartphone market.

And this is where things get interesting. Even today, foldable still account for only around 2% of the smartphone market.

And a lot of problems haven't completely disappeared either.

Creases are still here, durability is also a concern, and hinges are very difficult and expensive to manufacture consistently.

At the same time, smartphones are expected to fall 16.7%.

But, phones priced above $600 are still growing by around 5%.

So, phones overall are shrinking. Expensive end isn't. Interesting, huh? Why?

One explanation is that AI has sent demand for high-end memory through the roof.

And that's pushed up the price of DRAM too.

That hits cheap phones especially hard because their margins are already super thin.

Add, say, $30 or $40 to the cost of a $200 or $300 phone.

And certainly, you already wiped out a huge chunk of the profit.

But if you do the same thing to a $1000 plus phone, it still hurts for sure, but the business model doesn't fall apart nearly as quickly.

So, manufacturers do the obvious thing.

They cut cheaper models, trim specs, raise prices to push buyers towards more expensive phones.

Which means, AI may not have made your phone much smarter yet, but it may already be making the entire smartphone market more expensive.

That still doesn't explain why Apple is releasing a foldable model right now.

But it does push market in a direction that Apple has always been very comfortable with.

Up market.

Apple already has roughly 65% of the global smartphone market above $600.

That's about 2 out of every 3 premium phones.

And the foldables are getting more expensive too.

Last year, models priced above $1,600 were about only one third of foldable shipments.

This year, they are expected to be close to 60%.

So, this is still a tiny category, but increasingly a very expensive one.

For instance, iPhone 18 Pro Max starts at $1,299.

The iPhone Duo starts at $1,999.

That's a $700 jump.

Forecasts also say Apple can sell up to 6 million units of its first ever foldable model.

In total, Apple ships around 200 million units a year.

So, 6 million units are just a small fraction.

But at this price, that would be roughly $12 billion in gross retail value.

For perspective, that's even larger than Ferrari's entire 2025 annual revenue.

So, no.

Apple doesn't need this thing to become the next mainstream iPhone model.

And it can stay small and still matter.

I don't know how Apple is doing the math internally, but put this information together.

At least I can see why this makes more sense now than it did 10 years ago.

The hardware stopped feeling experimental and the foldable niche got a lot more expensive.

Not to mention that Apple was already unusually good at selling expensive phones.

10 years ago, the smartphone business could just grow by putting phones into more people's hands.

That game is getting harder now.

So, the next question is becoming how much more can the phone be worth?

Maybe foldables never become mainstream.

Apple may not need them to either.

At $1,999, a niche can already be big enough to matter.