Samsung courts Apple switchers

From Katie Prescott's "Samsung hopes Apple will fold at its feet" ($) posted Monday in The Times of London:

In a rare interview with the UK media, Bryan Choi, executive vice-president who runs Samsung’s global marketing division, said these latest foldable devices will be the company’s “secret weapons” in its fight to capture a share of the high-end mobile market. He did “recognise there’s a psychological barrier” when it comes to switching brands and “it will be a constant challenge for us”...

Choi said Samsung’s strategy is to make the range of foldables a “mainstream product, with sales equal to or greater than the Galaxy Note”, its discontinued high-end phone. Samsung claims that “one in five Fold customers have switched from another brand, more than half of them from Apple”...

Choi described this launch as a step change. “In a homogenous market of black touchscreen rectangles, it makes sense for Samsung to have products for users that want something that stands out from the crowd and I do think the phones are turning heads,” he said.

The phones are expensive — more than £1,000 — which is why they are so strategically important, the higher average selling prices help Samsung compete more effectively with Apple. The highest memory version (1TB) of the Fold4 is on sale for £2,019, which is about £500 more than the iPhone 13 Pro Max with the same memory.

My take: If the devices are expensive enough, iPhone users will just have to switch!

15 Comments

  1. Fred Stein said:
    One in five. Impressive? Not really.

    About 1/2 from Apple means 1 on 10 of Fold which is not selling that well. Samsung’s Flip sells a lot more. So is it the Fold or the Flip – big difference. And consider the source, Samsung, not an independent. Generally Samsung’s market share is declining vs. Apple’s increasing. And I’ll bet a lot the switchers will switch back.

    Finally: How many of these so called switchers are journalists or App developers, not mainstream customers?

    6
    August 15, 2022
    • Steven Philips said:
      Exactly the points I was going to bring up. Well said.

      0
      August 15, 2022
  2. Bart Yee said:
    @PED Thanks for giving us this, the article is behind a paywall so not accessible for most of us save maybe some UK FOBs who could quote or shed more light on the article.

    Here’s my analysis, caveat is hard sales numbers are hard to come by, and I don’t trust Samsung’s “shipped” number either so I’ll provide my estimates against “quoted” numbers by internet Samsung insiders.

    The 2020 Note 20 supposedly sold 7.5M, a low due to pandemic related hit on demand and its declining appeal. My sense is more like 5.5-6M sold so the bar is low here if Foldables are expected to “exceed previous Note levels”. The recent high point of 2017’s Note 8’s 10M units, and serial declining Note 9 (9.7M) and 2019 Note 10 (9.6M) were harbingers. My estimates were 9M, 8.5M and 8.2M respectively, sales being undermined by Chinese competitors.

    We come to today’s current Note replacement, the early 2022 S22 Ultra series. Samsung projects Ultra sales to be ~10.9M but I think they’ll fall short, partly because Foldables will cannibalize some of those sales. I estimate ~10M sales with huge marketing discounts to move them during Q4 2022.

    So far, 2021-2022 sales figures for Samsung Foldables range from 5.7M to 8M units, 70:30 Flip:Fold, so Flip 4M-5.6M units and Fold 1.7M-2.4M units, latter held down I’m sure by high cost (>$1800). These sure don’t seem impressive to me.

    4
    August 15, 2022
    • Bart Yee said:
      So “Samsung claims that “one in five Fold customers have switched from another brand, more than half of them from Apple”…” what does that mean? Take our high estimate of 2.4M Fold units sold. One in five switched, ok that 20% of 2.4M = 480,000. And of that 20%, “more than half from Apple” or maybe 11%.

      So Apple to Fold switchers are…wait for it…264,000 users. I’m sure Apple is quaking in their boots /s.

      Not inconsequential, it’s still $1800 x 264K = $475M in additional annual Samsung smartphone revenue and 264K x $825 ASP = $218M in lost revenue to Apple, but I suspect Android to Apple switchers in the low million range each quarter , say 1.5M (just ~3% of Q3 total iPhone sales) x $825 ASP = $1.24B+ coming back quarterly or $5-7B annually, and that’s a conservative estimate and not counting add-on revenue from Services revenue and additional hardware sales from Android switchers, let alone new de novo Users.

      I don’t think Apple has anything to worry about from Fold or Flip switchers. In fact, I would predict many returning once they experience Samsung related product or customer service issue or if and when Apple introduces an equivalent Folding iPhone.

      7
      August 15, 2022
      • David Emery said:
        The specific metric I’ll be watching for is longevity for these folding devices. How long before they break in Real World ™ situations?

        4
        August 15, 2022
        • Dan Scropos said:
          Yes. People will definitely want them to be proven reliable as well as needed. By then, should that happen, Apple will have its own folding device.

          Lastly, switching phones is easy but switching ecosystems is not. This does not yet appear compelling enough for a switch.

          The margins Samsung is seeking with these unproven phones shows that their smartphone strategy has been a loser. This will probably be no different.

          4
          August 15, 2022
        • Bart Yee said:
          @David Good observation! My casual research on Samsung Foldables problems suggest there are some issues still with the OEM “screen protector” delaminating, bubbling and peeling, creating a dilemma for users. More ominously, some users, especially in Europe, are reporting display cracking, higher crease visibility, and sectional display malfunction. All of this with the Z Fold 3 and to a lesser extent Z Flip 3, both of which are less than 1 year old. Many users tried to get their carrier or Samsung to repair or replace under warranty only to have said carrier or Samsung’s repair agents claim the user damaged or abused the device, hence voiding the warranty and causing €400-€700 repair charge to be incurred. Many were incensed and escalated up the chain at Samsung with varying levels of success getting Samsung to agree to repair at their cost. All this takes days to weeks to accomplish if at all.

          Not a good way to support a €1700 to €2400 device, but hey, it’s Samsung. Interestingly, Samsung made a big deal of lowering screen replacement repair prices of the new Flip 4 and Fold 4, especially if you choose their $13/month CarePlus plan. But “out of warranty” costs are still not cheap, being up to $480 in the US for Fold 3 repair.

          1
          August 15, 2022
        • Fred Stein said:
          Good question. As a proxy, check the loss in price for a 1 year old used Fold or Flip. They dropped nearly in half.

          Apparently the new models from Samsung (no info on other foldables) are supposed to be highly reliable based on stress tests.

          But, so what? The Fold is very expensive and thus marginal in term of market share. The Flip, at $999, has the same camera features etc. as the nearly one year old iPhone 13 (non-pro) at $799. In other words, iPhone 13 Pro prices for a foldable iPhone 13. Of course Apple will up the specs with the iPhone 14.

          1
          August 15, 2022
      • David Emery said:
        The other thing I’d bet on is that a lot of those ‘switchers’ aren’t -switching-, rather they’ve added a Samsung folding phone to evaluate the technology/utility. That’s particularly true for app developers who would need to understand usability before committing to the big changes to support folding devices. I bet they have both the folding phone and their iPhone in their pockets.

        And I’m sure some of them are also journalists & tech bloggers who want to play with the ‘next potential thing’. They, too, probably kept their iPhone while playing with the Samsung device.

        5
        August 15, 2022
  3. Jerry Doyle said:
    Foldable phones are coming. It just is a matter of time until they catch-on and the quality and pricing is attractive to the masses.

    The utility of the foldable phone if available in a premium device of high quality material, fully functional over long periods with an attractive pricing cannot be and will not be ignored by the public. I believe Samsung understands this fact deeply. I also believe Apple does likewise. Apple is just more patient to wait, study, analyze and work in the background to have one available to roll-out when all signs say now is a propitious time to do so. One day soon during this decade, foldable phones will become omnipresent.

    4
    August 15, 2022
    • David Emery said:
      What’s the use case for a foldable phone? Is it just seeing more of a website? It’s not clear to me how app developers would respond to foldable phones, variable screen space on a device would add -substantial- complexity to app design (user interface and coding.)

      I think folding tablets make more sense than phones. In particular, an iPad Mini that folded out would provide a “look and feel” similar to a paperback book.

      2
      August 15, 2022
    • Jacob Feenstra said:
      @Jerry. There needs to be a compelling reason for the foldable phone—other than it being gimmicky and showoff. Currently it’s simply not practical enough. Many people don’t want a brick in their pocket… that you have to open up and often hold (as I’ve noticed) with two hands. They certainly don’t what it in their back pocket. Though Steve Jobs was wrong in assuming that the original iPhone size was ideal—people did want a bigger phone (screen, really) than that—but size, volume and weight does have a limit. I know you are sold on the prospect of foldable phones. It may happen, but only with a significant reduction in thickness and a one-handed way of opening it (like the Razr). Let’s come back to this a few years from now… For now, I’m on the non-foldable side of the fence.

      5
      August 15, 2022
    • David Lum said:
      I agree – there could be significant demand for them if foldables are done right. Much like the original Samsung Note, no one saw its value. Anyone who spends considerable time on a daily commute, or travelling on vacation, would appreciate a bigger screen, either watching Netflix or YouTube, or reading a book, etc. And then there’s the Asian market. That was the real driver for bigger screens because of the difficulty of reading Chinese characters on smaller screens.

      The real question is execution.

      3
      August 15, 2022
  4. I needed a good belly laugh! Folding phones are a customer service nightmare for a low volume (comparably) expensive handset. That said, if Apple tweaked iOS to allow two iPhones to do some sort of Vulcan mind-meld, I’m certain Belkin would be willing to design a case that holds two iPhones close. The result would look, function and cost exactly like a folding phone.
    I’d rather see two small holographic projectors capable of beaming a full-size keyboard before me and project a hi-res translucent screen that hovers before me. Gesture controls, aka motion sensing input device to simulate typing and touch screen actions. Eventually reduce the hardware to sunglasses or a contact lens.

    3
    August 15, 2022
  5. David Drinkwater said:
    “My take: If the devices are expensive enough, iPhone users will just have to switch!”

    This really resonated for me: not because I agree that iPhone users will have to switch, but because at these high prices, of course a significant majority of “switchers” will be affluent, and therefor probably iPhone users. And I also agree with others that these may not be switchers, but adders, who still keep a phone to be a phone and use a foldable as an additional device.

    In cases like that, I have to admit, sometimes it’s a PITA to remember to charge my iPad before the weekend. It’s my main Sunday Brunch companion. Where I try to catch up on PED 3.0! 🙂

    0
    August 17, 2022

Leave a Reply