At 1:00 AM Beijing time on September 10, Apple's autumn event, often referred to as the "digital Spring Festival Gala," arrived as scheduled. However, unfortunately, the long-hyped Apple Intelligence feature failed to materialize as expected.

This company, long considered synonymous with innovation, continued its steady product iteration strategy with the iPhone 16 series. Instead of taking radical steps with foldable screen designs, Apple focused on refining details, from the upgrade to the A18 chip to the addition of a physical camera button. It seems Apple is sending a message to the market that it has never stopped refining its technology and optimizing user experience.

However, for consumers expecting groundbreaking form factor innovations from Apple, such updates might not be satisfying enough.

The dramatic contrast lies in the fact that just 13 hours later, across the ocean in Shenzhen, China, Huawei held its "Extraordinary Brand Ceremony and HarmonyOS Smart Travel New Product Launch Event." In addition to the officially announced Wenjie M9 five-seater version, the highlight was undoubtedly Huawei's new "Masterpiece" series product, the Mate XT — the rumored tri-fold smartphone.

The difference in product philosophy between Apple and Huawei is akin to having two friends, one who always tries new restaurants and the other who insists on visiting the same old one. One chooses stability, while the other opts for adventure. Apple's strategy leans more towards incremental improvements and deep mining of existing technology's potential, while Huawei takes a more radical path, attempting to lead market trends through form factor innovations.

In Q2 this year, iPhone shipments in China declined 6.7% year-on-year, ranking only sixth. This marks the first time ever that all top five spots in the mainland market have been occupied by Chinese vendors. It is foreseeable that if Apple continues with its "incremental innovation" mindset, its development in the domestic market will likely face pressures for some time to come.

Huawei's tri-fold screen concept, on the other hand, is not only a bold prediction of the future form of smartphones but also signifies comprehensive breakthroughs in China's mobile phone industry chain, including screen technology, mechanical structures, software compatibility, and more. This innovation gives Huawei a valuable edge in the global high-end smartphone market competition.

Of course, judging from current market feedback, despite significant technological progress in foldable phones, challenges remain in user experience, cost control, application ecosystem, and more. Notably, there is a mismatch in the development pace between foldable phones of different sizes, with large and small folds seemingly following divergent paths.

01. Six Years Since Launch: Some Turtle Race, Some Make Up for Lack of Talent Through Diligence

In the current consumer electronics market, it's hard to definitively say whether Apple or Huawei's strategies and philosophies are right or wrong. However, one thing is certain: whether measured by shipment volume or market share, foldable phones are entering a crucial acceleration period.

Last year, global foldable phone shipments reached approximately 18 million units, a year-on-year increase of 27%. The domestic market performed particularly well, with IDC data showing that Chinese foldable phone shipments in 2023 reached about 7 million units, a year-on-year increase of 114.5%. Counterpoint Research predicts that foldable phone shipments will continue to rise, exceeding 100 million units by 2027.

On August 21, market research firm CINNO Research released China's Q2 2024 foldable phone sales rankings: total sales reached 2.62 million units, a year-on-year increase of 125%, in line with earlier forecasts.

The most notable highlight from the rankings is that Vivo ranked second with a 31.9% market share, far ahead of third place. In the first half of last year, Vivo's share was only 12.6%.

Judging from Vivo's main sales models, its current foldable sales driver should be the X Fold3 series, launched on March 26, 2024. Based on market share calculations, sales of these two phones likely reached around 800,000 units.

Frankly, Vivo's sales figures are surprising. Given its late entry into the foldable market with the X Fold in 2022, when domestic vendors like Huawei, Xiaomi, Honor, and OPPO had already established their presence, Vivo's rapid rise in just two years is reminiscent of the tortoise and the hare fable.

As for Huawei, without a new foldable model introduced, its main sales driver should be the Pocket 2. From a cost-effectiveness perspective, this model is not particularly compelling.

It's worth noting that while the latest tri-fold flagship Mate XT series has been announced, its launch is scheduled for mid-to-late September. Coupled with a starting price of RMB 19,999, its immediate impact on Huawei's Q3 market share may not be significant. The nova Flip series, launched earlier on August 5, will undoubtedly bear the burden of sales in the second half of the year.

OPPO ranks third with an 11.1% market share, translating to approximately 290,000 units sold, a notable gap behind the top two. Considering that its small foldable phone has not been updated, sales are likely driven by the OPPO Find N3 and N3 Flip launched in the second half of last year, which is unsurprising. Honor follows closely behind with a 10.4% market share, slightly lower than OPPO. Its only new model in Q2 was the Magic V Flip, launched on June 21, with limited sales data over nine days. The good news is that the Magic V3 series was launched on July 12, and Honor's Q3 performance should improve.

Somewhat disappointingly, Xiaomi ranks sixth, behind Samsung with a mere 2.8% market share, equivalent to about 73,000 units sold. Sales are primarily driven by the MIX Fold3, launched in August 2023. Relying on a single model is understandable, but as a mainstream phone manufacturer with an early foldable layout, such performance is hardly satisfactory. It seems that since Lei Jun shifted his focus to Xiaomi's automotive venture, he has paid less attention to the phone business.

Moving on from the major players, a special mention goes to Nubia, with a negligible 1% market share. Over the years, Nubia has focused on Red Magic gaming phones and true full-screen phones with under-display cameras, deviating from the development paths of other mainstream vendors. Objectively speaking, while its system optimization lags behind the state-of-the-art, Nubia offers good value for money and a geeky aesthetic, particularly with the Nubia Flip starting at RMB 2,899, making it an attractive option for those eager to try foldable phones.

In the six years since foldable phones hit the market, from Huawei's pioneering efforts to Vivo's emergence and Honor's steady layout, the race has seen frontrunners maintain their lead, latecomers catch up (like the tortoise and the hare), and some struggling despite an early start. Strategies vary, but each has its merits.

As prices drop and models diversify, consumer concerns about foldable phones are gradually dissipating, leading to increased market acceptance. As technology matures and costs further decrease, foldable phones' transition from niche to mainstream products is inevitable. However, their development is already showing signs of differentiation.

02. Large and Small Folds Heading in Opposite Directions

Since Royole unveiled the world's first foldable phone in 2018, debates have raged over whether foldable screens are a genuine need. However, the overall growth of the foldable phone market in recent years has gradually silenced such doubts.

Yet, the term "overall" somewhat masks the underlying issues. If we distinguish between large and small folds, statistics show that in Q1 2024, large fold sales in China increased 91% year-on-year, while small fold sales declined 1%, indicating divergent development trends.

Small folds first entered the public eye in 2020. Due to production issues, Samsung's large fold, the Galaxy Fold, underperformed. To regain ground, Samsung switched from a vertical to a horizontal fold with the Galaxy Z Flip, which sold out within 30 minutes of its launch. The success of the Galaxy Z Flip reassured other vendors who were still on the fence.

Subsequently, OV, Honor, and Xiaomi followed suit, with small folds even becoming OPPO's flagship foldable models for a time, such as the Find N3 boosting OPPO's market share above $800 to new highs, and the Find N3 Flip topping the vertical fold market in 2023.

However, according to Yuanchuan Research, in February this year, insiders revealed that most phone brands were considering abandoning small fold product lines due to low profit margins.

One key factor behind the "discontinuation" is low profitability. Most small fold models are priced similarly to flagship straight phones but incur significantly higher costs due to hinges, foldable glass, and flexible OLED panels. This means producing a small fold is far less profitable than a flagship straight phone.

Based on last year's small fold sales, IDC data shows that Chinese small fold sales totaled only 2.2352 million units, with OPPO leading the pack with 811,000 units. If we adopt Honor CEO Zhao Ming's statement that small folds need sales of over 1 million units to achieve break-even through economies of scale, none of last year's small folds in China were profitable.

In contrast, the limitations faced by small folds in product evolution are less severe for large folds. Large folds often have higher market positions, freeing them from direct price comparisons with straight phones and allowing greater design freedom. Manufacturers are also integrating features like remote PC control, large-screen taskbars, and multi-screen continuity to enhance productivity. Like small folds, large folds have also seen price reductions through optimization, lowering the barrier to entry for consumers.

To enhance small folds' market appeal, manufacturers are innovating from multiple angles. For example, they're focusing on the functionality of the cover screen, with brands like Xiaomi and Honor optimizing app compatibility and pushing cover screen sizes to their limits, endowing them with more practical functions like mainstream app compatibility, call answering, and signal enhancement. Facing challenges in performance and heat dissipation, manufacturers are exploring advanced cooling technologies and powerful hardware configurations.

On the other end of the market strategy spectrum, small folds are increasingly targeted at female consumers seeking fashion and individuality. By positioning small folds as fashion accessories and expressions of personality, manufacturers aim to tap into new growth areas amidst fierce competition.

However, the limitation is that without offering a core experience comparable to flagship phones, small folds mainly appeal to consumers with simpler phone usage needs or who use them as secondary devices. This limitation suggests that small folds are unlikely to dominate the market and will remain confined to specific niches and user groups.

03. Final Thoughts

In previous articles, Xinlichang expressed the view that China's mobile phone market faces two contradictions: the contradiction between the maturing high-end market, leading to rising average selling prices and declining overall sales; and the contradiction between rising user demand for phone upgrades and slowing product innovation.

The "scissors gap" formed by these contradictions urgently needs a phenomenal product to bridge. Foldable phones, with their countercyclical growth, naturally become a decisive force in driving market recovery. The key variable lies in whether manufacturers can offer products tailored to niche market demands in terms of appearance, functionality, and price.

However, neither small folds that compromise core experiences nor the Huawei Mate XT starting at RMB 19,999 can shoulder this responsibility. In Xinlichang's view, while Apple has yet to launch a foldable phone, it actually has a series that could potentially fill this role — the iPad mini 6 series, which has been discontinued since 2021.

Theoretically, the iPad mini's use cases can be largely covered by large fold phones. In fact, the rapid development of foldable phones has occurred precisely during this hiatus.

Recently, rumors emerged that Apple will resume production of the iPad mini 7 in the second half of this year. While the iPad mini may not be a direct competitor to domestic foldable phones, its potential return serves as a wake-up call for domestic foldable phone manufacturers.

After all, the combined price of a straight phone and an iPad mini could even be lower than that of a flagship large fold phone, making it a more cost-effective option for those without rigid business needs.

*Images in the lead and the article are sourced from the internet.