Summary in One Sentence:
In the past 72 hours, Xiaomi, Huawei, and Apple have all released foldable smartphones priced over 10,000 yuan. Despite the apparent coincidence of their similar designs and release timing, the real reason behind this is the skyrocketing prices of storage chips, which have severely eroded the profits of lower-end phones. All smartphone manufacturers are forced to shift from focusing on mass production for small profits to targeting the high-end market for higher margins. Foldable screens have become the only segment with significant potential for profit, but each company has its own strategies and challenges, and there's no room for easy victories or shared profits.
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Detailed Analysis:
1. The Competition for High-End Foldable Screens is Not Just for Show; Lower-End Models Are No Longer Profitable
Think of smartphone manufacturers like restaurant owners. Previously, selling egg fried rice for 10 yuan with costs of only 3 yuan for rice and eggs still allowed a small profit. This year, however, the cost of these ingredients has tripled, making it unprofitable to sell even one bowl. The same situation applies to the smartphone industry: the cost of storage chips used for storing photos and apps has increased significantly. In the past, a 1000-yuan phone might have only cost 200 yuan in storage components, but now that cost has risen to 1200 yuan, resulting in losses on every sale. Data shows that the proportion of new phones priced below 1000 yuan in China has dropped from 22% in 2023 to 2.7% this year, with almost no manufacturers willing to produce such models.
Companies like Xiaomi, OPPO, and vivo, which once relied on mass sales, are now in a dilemma: if they raise prices, customers will find them too expensive; if they don't, they will suffer heavy losses. Brands like Apple and Huawei, which already sell at higher prices, can easily absorb the increased costs because the increase is negligible relative to their overall prices. For them, focusing on the high-end market is no longer just about maintaining their brand image but a matter of survival. Foldable screens represent the highest-profit opportunity in the current market segment.
2. The Coincidental Designs and Timings Are Actually Strategic
The simultaneous releases were not by chance; each company had its own motives:
- Xiaomi chose to release its new foldable three days before Apple’s event, copying Huawei’s popular design. This move aimed to leverage Apple’s media attention and gain free publicity. It also took advantage of Huawei’s efforts in educating consumers about the appeal of foldable screens, as the Pura X Max had already sold 1.2 million units. By entering the market early, Xiaomi could establish its position in the high-end segment and raise its brand value.
- Huawei used its newly developed chips to gain a competitive advantage, as all foldable phones need to be adapted for various apps. Having already invested in developing a robust app ecosystem, Huawei would set the standard for other manufacturers.
- Apple’s strategy was straightforward: it aimed to cater to its premium customers by offering the highest-priced foldable phones, creating a new profit margin segment. With the Pro Max reaching over 15,999 yuan, Apple aimed to attract users willing to pay for the latest and most expensive products.
3. A Common Problem for All Foldable Phones: Apps Not Optimized for the New Screens
A significant issue is that many apps are not optimized for the larger screens of foldable phones. This means that even though users buy these devices for their larger screens, half of the screen area remains unused due to unoptimized apps. This is a widespread problem that cannot be solved by simply using the best hinges or thinnest screens. Manufacturers must work with app developers to adapt apps specifically for foldable screens, a process that will take several years.
The competition is essentially about who can complete this adaptation first, as it will significantly impact the user experience and customer loyalty.
4. No Company Has a Sure Win; Each Faces Unique Challenges
- Xiaomi needs to break the perception of its products as being inexpensive and establish a new premium image.
- Apple needs to make up for its five-year delay in entering the foldable market and prove the value of its high-end products.
- Huawei needs to maintain its lead in foldable technology and ensure its supply chain can keep up with demand, especially considering its reliance on domestic markets and its own chips.
5. Foldable Screens Are Not a Panacea for the Industry
Despite the hype, foldable phones currently account for only 2% of global smartphone sales. The industry is still in its early stages, and the competition is mainly for existing customers. The so-called “high-end breakthrough” cannot be achieved with just one product; it will require a sustained effort over several years. The current rush to release foldable phones is just the beginning of a longer battle.