Despite Samsung Electronics' high expectations for the sales performance of its newly launched foldable smartphones, the Galaxy Z Fold 6 and Flip 6, intense competition from rivals such as Huawei, Xiaomi, Honor, and Motorola is rapidly intensifying. This competition has forced Samsung to reconsider its strategy regarding the positioning and pricing of its foldable smartphones.
Samsung has had a successful year in the high-end flagship smartphone market. The Galaxy S24 series has exceeded sales expectations due to the incorporation of generative AI. Additionally, the foldable form factor is seen as being particularly suitable for generative AI functions. With Samsung's continued improvements in the durability, weight, and hardware specifications of foldable smartphones, the company is expected to maintain its top spot in foldable smartphone shipments, securing nearly 50% of the market share.
However, with competitors intensifying their efforts, it has become increasingly urgent for Samsung to adjust its sales strategy for foldable smartphones to maintain its market position.
Smartphone retailers have reported strong sales of foldable smartphones in regions like China and Europe. In the Chinese market, Huawei's Mate X5 continues to perform well, allowing Huawei to capture over 40% of the local foldable smartphone market. Other popular foldable smartphone products in China include Vivo's Flip3 and Honor's Magic V2.
Furthermore, according to Counterpoint Research, Europe is the second-largest foldable smartphone market after China. In the second quarter of 2024, Honor surpassed Samsung to become the largest foldable smartphone brand in Europe, thanks to the success of the Magic V2. Meanwhile, Motorola's Razr 40 has also driven strong sales in North America and Latin America, raising concerns that Motorola could challenge Samsung's leading position in these markets.
Industry sources noted that it has been nearly six years since Samsung launched its first-generation foldable smartphone product line in 2019. With the boost from generative AI, annual shipments of foldable smartphones are expected to reach nearly 25 million units this year.
There have been speculations that Samsung may introduce a simplified FE version of its foldable smartphones in response to the cost-performance ratio competition launched by its rivals. Samsung has already stated that it plans to extend generative AI features to its previous-generation flagship models. Additionally, the company is renegotiating with telecom operators on contract plans to expand the sales momentum of its foldable flagship smartphones.
However, industry sources suggest that Samsung may not need to launch an FE model or release generative AI features to older flagship models to boost foldable smartphone sales. Instead, significantly lowering the prices of previous-generation foldable smartphones alone could effectively challenge competitors' sales. Furthermore, by keeping generative AI features exclusive to the latest flagship models, the potential sales cannibalization of new products by discounted older flagship products could be minimized.
Moreover, Samsung's past success in the foldable smartphone era was partly due to its ability to combine technology with fashion and Korean pop culture. Currently, the sales ratio of Samsung's Fold and Flip series in the market is roughly 4:6. If Samsung can reposition the Flip series' product image by enhancing its blend of technology, trendiness, and fashion, it could have a positive impact on the overall sales performance of Samsung's foldable smartphones.
