Why Is Every Phone Maker Suddenly Betting on Foldables?

0:00 When Samsung made its big foldable phone push in 2021, interesting thing happened. So, first of all, their overall sales went up by 6%. But revenue went up 11%. And I think when you look at what Apple is doing, remember you know, up until the 17, the iPhone sales were effectively stagnating, right? 17 had a bunch of new features people liked, and now we're seeing some good sales. They've been up, I think, 21% quarter over or year-over-year in the first quarter of this year. or the most recent quarter. I always get mixed up which what Apple refers to as the first quarter and the second and third.

0:35 but the most recent quarter up 21%. I think the quarter before that up 20%. that's that's sales. But but ultimately I think with these models people have been hanging on to them longer and there's only a certain level of price that you can get. And so if you're thinking about what Wall Street is going to care about, you sort of set yourself up in a tough position and that's why you've been relying so much if you're Apple. You've been relying so much on services. With a $2,000 plus phone, all of a sudden your upper bound of the amount of sales that you can get is much higher. And so when you have a new CEO coming in, like John Turnis is coming in, what you want to do is be able to go to the market and be like, we're just getting started in terms of the revenue increases. you can see under me. And I kind of wonder if that's what's in the back of their minds or in the front of their minds and whether that is sort of the driver of the timing that we're seeing for the Cook Turnis changeover. I mean, we talked about it a little bit even before when the Cook stuff was just rumored, right? Like one of the things that we went back and forth on was the notion that this could be the right time for for Cook to take a step back because of exactly what you're talking about because the pipeline the potential setup you know to put someone in turn like in in turn someone like Turnis in his place after the amazing run that Tim Cook has had from a stock perspective and obviously revenue and the business perspective like how do you how do you follow that up? It's going to be very hard regardless of course, but you've tried to do that by setting your successor up with a great product lineup. you know, and a lot of things in the shoot that are ready to roll. And it feels like again, you know, the Apple famously has has just over the years, while they've kept iPhone prices steady until recently, and we can talk, you know, a bit more about that, with all the component issues and the memory chips and whatnot and and supply chain stuff. but so they've been able to mostly maintain price consistency across certainly the iPhone lineup, but the what they've done is basically raise the average selling price over time by keeping by introducing the Pro models and the Pro Max models and now the quote unquote ultra model if that's indeed what they call it. And so that of course what's it going to do the average selling price?

2:47 It's going to jack it way up if this thing is over $2,000. Now, maybe their margins, you know, again, their margins are obviously impacted by all the component stuff that we just mentioned, but but still, it's going to look good when all of a sudden analysts see, yeah, the average selling price of the iPhone continues to go up and turn us. like, you know, Wall Street has nothing to worry about because, we've got all these new products in and and people are excited about new Macs and you know, new Mac minis for for the AI revolution and all this sort of stuff that's sort of come in. And so yeah, it felt like Cook teed him up well and Apple overall is in a is in a good spot for the foreseeable future with that pipeline.

3:28 >> Now Motorola also you mentioned them when they released their flip phone, their folding phone, their sales went up 21% and average sales price went up I think 17%. So clearly when companies do this there's like a predictable windfall at the end. I've always said that people with folding phones they just look happier than people with phones that don't fold. I'm curious like if you could talk a little bit because you've looked into the product as well. Obviously, you know, you thought about getting one of the demo models. talk a little bit about what the phone is going to look and feel like. You mentioned it's kind of like passport style. I don't know if it 100% looks the way that I expected. It might be a little bit like the height might be a little smaller than I anticipated.

4:10 so I'd love to hear your perspective just on like what this is going to look like and you know I think we both believe that it's going to be a hit, but why you think it will be a hit. and I think people are just going to be excited about having a new form factor and I think the form factor they chose, which is a little bit different than what Google and some of the others have done in the past on the folding side. I think it it sounds good on paper. I even obviously used it, held it. I debated sort of trying to buy one of those Chinese demo units just to see what it would feel like sort of that size and ratio in hand. I didn't go down that path, but but I do I think it's it's setting up well to be a good device. And I think the fact that Samsung has noted, you know, they released their version of the the Galaxy flip phone that, has that same sort of aspect ratio and the Passport style as you noted. I I think the fact that that seems to be doing well, the reviewers love that thing. I think the form factor is going to be going to be a winner. I've had three different versions of the Pixel Fold. and I have the not the current the one that they just released the 11, but I have the 10, the Pixel Fold 10, and it's a different form factor as noted, like it's longer. you know, to your point, it's not sort of the Passport style, but I basically buy them. It's my, you know, Android test device, my backup to my iPhone, but it's also just to be able to test out the Flip, you know, and what the foldable features feel like and and how I would actually potentially use them. I do think again this iPhone form factor I think is smarter. I think the the Pixel Fold to me felt a little bit awkward in that it feels like it's very sort of narrow when you're holding it folded straight on.

5:47 it's very tall and narrow. It's, you know, it feels a little bit like a standard phone, but a little bit more narrow, but then when it's open, you know, it's much more of a of sort of a rectangular square, almost square. and it feels, good obviously for watching media and whatnot. And that's obviously how they feel that these devices, you know, give them an advantage, in the market right now. but I think the iPhone I think what Apple will hit on here is I think the slightly more passport-like shape.

6:17 in when I'm envisioning it, I think about like right now with the current I have a Pro Max, so it's obviously the massive one and it's and it's very tall. It's obviously hard a little bit challenging with some pockets to fit in pants pockets and so I think that the the new passport style foldable will do a little bit better in that regard. But it's also honestly just a little weird to type on. I've always sort of thought that because your hand your fingers are so close together your thumbs are so close together when you're typing. I think this will elongate it a little bit and make it a little bit easier. I've called it in the past like wondering if it's going to be more like a Blackberry of old, obviously without the physical keys, but still that that style of you know that that basic shape I think was actually a very good sort of typing shape. And so I think it might be good in that regard. but it will be very interesting how Apple does the OS for this, right? Like there have been reports that it's going to be sort of a hybrid between iOS and and iPad OS. It's not going to be full-on iPad OS when you open it up. So, it's not like switching between two different operating systems, but again, sort of like a hybrid in between version of those. And I do think that Apple can do some pretty interesting things when you do unfold that device. obviously sideby-side mult multitasking is something that everyone does right now, but it'll be curious if Apple does some stuff. And of course, they will they'll have they'll want to play it up in the in the marketing of it like what this device can do that other foldables can't do. And so what are those sort of software features that they come up with that are unique to this iPhone Ultra, if they call it that. and again, when it's folded, it's still going to be an iPhone. It's going to be a little bit different of a form factor, but that is how I envision it. I envision it when it's folded up. It's sort of your standard iPhone. maybe they have a little bit, you know, more fun with the widgets or whatnot because of the slightly different screen size, but then when it's unfolded, that's when it becomes really interesting. I am a huge fan and I have been forever of the iPad mini. I know I'm sort of a little bit far a field of that. They've obviously been been selling them and making them for years now, but most people tend to buy, you know, a regular sized iPad or an iPad Pro model. I like the mini and this by all accounts is going to be a very similar size to the mini when unfolded. And so I think that that's it's going to be really interesting as a yeah media consumption device and potentially multitasking stuff, >> right? So, I guess like for me the real question is is this is is this going to be media first or like business first, right? Is this going to be a device where the pitch is going to be it's easier to type and you can do your emails on it or is it going to be like you can watch YouTube and Netflix on it?

8:47 and sort of like cuz that's the the when I think of somebody being happy with a foldable phone, I think of them kind of, you know, grabbing their seat in the airplane, unfolding the phone, and like hitting YouTube or Netflix right away and getting this big smile on their face. So, I'm curious what you think. Is there I mean, with the iPhone, obviously, it's both, but do you think there's going to be a, you know, a lead use case for this? you're giving me an idea in real time of of an angle to take for this, which is like it's sort of like the mullet iPhone, right? So, it's a it's a party. It's a party when unfolded, but it's straight and center like when it's folded up. So, again, it's like it's sort of like business.

9:26 You got your regular phone folded up. You're just doing that. You're you're doing some emails. You're doing some some typing. You're maybe taking phone calls and and you're doing some other stuff quickly. but then when you have some time to sort of sit back and and lean back experience, which again, like from the from the original introduction of the iPad with Steve Jobs sit sitting on that leather chair, right? It's like that's the sort of lean back experience and and you can sort of relax a bit. And that's sort of how I view it. I wouldn't be shocked if they if they play that up. Obviously, they'll want to still talk about the productivity gains you can get from unfolding and having a bigger screen, but I do think a lot of it, you're exactly right, is going to be Yeah. just watching YouTube, watching videos and then reading and and again they'll play up multitasking sideby-side apps which will be great. but a lot of it will be that again leanback experience and again so it's a sort of a a party a party when unfolded and all business when folded type thing. The mullet iPhone >> I'm ready to party. I mean, I do enough business travel that all the way that we're talking about it, even though the price tag is so high, it kind of starts to feel like something I might want to have, especially for flights and airports, like, you know, just trying to think, all right, I'm doing email on the phone now. I get to that terminal, there's an hour or an hour and a half or 2 hour delay, which is really common.

10:46 might be nice just to like kind of lean back in the chair with a bigger screen and like watch some YouTube or Netflix until the fight comes. So, here's the road map for 2027 and beyond. So, Apple is also working on aside from the things that we've talked about today, AirPods with cameras, an in-home security sensor and system, smart glasses, a tabletop robot version of the smart hub, and potentially a pendant with a camera for artificial intelligence.

11:16 This does not seem like the Apple of the last 10, 15 years. This seems like an Apple that is willing to take much more chances on products than it had previously. And now maybe part of that is sparked by AI or pressured by AI. but it almost seems like a completely separate company from the one that Tim Cook has been running for a while. And we know it's not all John Turnis or maybe it is right that Turnis as part of the vision for CEO is hey look I'm going to release many more products and obviously he comes from a hardware engineering background. but it just seems to me like a major strategic shift for Apple.