Smartphone Makers Gamble That They Know When to Fold 'Em

By Dan Strumpf and Sara Germano 

BARCELONA--At the mobile-phone industry's premier trade show, two of the world's three biggest makers lavishly displayed what they hope will be the smartphone of the future. The question is, will anyone buy it?

Samsung Electronics Co. and Huawei Technologies Co. showcased their first folding-screen phones--unveiled within days of each other last month--in their sprawling pavilions at last week's MWC Barcelona. But they maintained the mystique. Unlike the rest of their lineups, which the 100,000-plus attendees were welcome to handle and test, the folding phones were behind glass and roped off to keep viewers at a distance.

The companies are hoping the first complete design overhaul of the smartphone since its birth more than a decade ago will persuade consumers to upgrade and pay more for extra screen real estate. The industry has suffered five straight quarters of falling sales as users see less reason to replace their current models.

But mobile carriers, which will do much of the selling, say they aren't counting on a stampede of buyers--at least initially. First, folding-screen technology isn't proven in the real world for performance and surviving wear and tear. Second, the eye-popping price tags exceed those of many fully loaded laptops. Samsung's Galaxy Fold is slated to cost $1,980 when it hits shelves April 26, while Huawei's Mate X, expected midyear, will top $2,600.

"Do I think it's a huge market? Probably not," said Ronan Dunne, president of Verizon Communication Inc.'s consumer business, in an interview. "Do I think it's a really interesting development of use cases and devices? Absolutely."

Jun Sawada, CEO of the Japanese telecom giant NTT, said there were question marks over the durability of the phones, especially the opening and closing, as well as the price.

At a Huawei-hosted cocktail reception here, patrons sipped on Cava and ate foie gras while consumer-business chief Richard Yu showed guests the Mate X, which displayed a faint crease when unfolded, and posed for selfies from each of the cameras.

Underscoring the rivalry between smartphone makers, Samsung introduced its folding phone in San Francisco on Feb. 20, four days before Huawei's unveiling in Barcelona.

The designs differ. When folded, the Samsung model's screen closes in on itself, while the Huawei screen wraps around the outside. The Samsung Fold has six cameras to Huawei's four, and can display three apps at once to Huawei's two.

Jean Baptiste Su, an analyst for Silicon Valley research firm Atherton Research, has handled both phones. The Samsung Fold is narrower and easier to use with one hand, he said, while the Huawei Mate X is thinner and folds completely flat.

"Both are beautiful phones," Mr. Su said, with "very sturdy design." Price isn't an issue for "new category" phones, he said, comparing the folding models with the first iPhone, which cost a minimum of $499 in 2007, while some later models were priced as low as $199.

But consumers have proved hard to convince that top-of-the-line devices are worth their rising price tags.

"Why do we need a folding screen?" said Saeed Abdullah, a 29-year-old taxi driver in Barcelona. "For EUR2,000, I don't think so."

Apple has yet to join the folding-screen fray. It has submitted patent applications for a foldable phone from 2011, but plans for three new iPhones this year don't include a foldable device, according to previous reports by The Wall Street Journal. The company has a record of trailing rivals in features. For example, Samsung launched large screens and transitioned to OLED--organic light-emitting diode displays--years before Apple. An Apple spokeswoman declined to comment.

Analysts expect high prices to keep the folding-phone market small. Research firm Canalys forecasts that vendors will ship fewer than 2 million this year, out of more than a billion smartphones overall. Still, smartphone makers hope the devices will help inject new life into a market that has shrunk as consumers--apparently unimpressed by recent innovations--hold on to old handsets longer.

Last year's decline in shipments was the biggest on record at 4.1%, according to International Data Corp., though Huawei has been bucking the trend. Its global smartphone sales rose 34% in 2018, challenging Apple as the No. 2 maker behind Samsung, according to IDC.

On the sidelines of the Huawei reception, Mr. Yu said the company is treating the foldable phone as an aspirational product.

"With time, we can reduce the cost," he said.

Sarah Krouse and Tripp Mickle contributed to this article.

(END) Dow Jones Newswires

March 04, 2019 07:22 ET (12:22 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.