Google Pixel Fold has its own 'short-term challenges' amid low demand for foldable phones: Analyst

IDC Mobile Device Tracker Program Vice President Ryan Reith joins Yahoo Finance Live to discuss the new Google Pixel Fold, including demand, challenges, pricing, and potential competition from Apple in the market.

Video transcript

- All right, well, Google unveiled the Pixel Fold at its I/O conference yesterday, marking its first foray into the foldable smartphone market. The move into the space leaves one notable exception among all these big players-- Apple. So why hasn't it jumped on the bandwagon?

Joining us now to discuss is Ryan Reith, the program vice president for IDC's mobile device tracker suite. Good to have you on the show, Ryan. So first want to really get some background here starting with Google's phone here. So this Pixel fold, $1,799 here. Tell me, why do we need this? Why is Google even entering this space right now?

RYAN REITH: Yeah, well, thanks for having me on as always. Good to talk to you again. I think-- the short answer is I think it's a little bit of follow the leader in the hardware space. If you think about smartphones, tablets, even PCs to some extent, you know, the hardware designs have gotten somewhat boring. You know, things have gotten bigger. The glass is there. Things are thinner. We've passed all those stages.

And the rest of the industry, putting Apple aside-- certainly the rest of the phone industry in the Android space has already gone into this foldable form factor, so it's sort of follow the leader. And you know-- anyways, that's really what it is. We're not seeing the demand for these products just yet. I'm not completely pessimistic on the category in the long run. But I think it certainly has its short-term challenges.

- And that's the thing. Like you know, I was asking around as to who actually has a foldable phone. I think only one person that I've spoken to actually has one. So what is actually going to be driving the demand then? People already pay so much for the phones they have. What is going to make them want to switch to these sorts of devices?

RYAN REITH: Yeah, I think it's a good question. Certainly not price, right? Even at $1,800. You know, let's just backtrack, right? I mean, when Samsung launched the first, I think, foldable back in 2019. It was $2,600, $2,700 if I'm not mistaken. So it's come down. And there's foldable phones-- I was in China a few weeks ago looking at some phones from some of those OEMs in Android space that are of the flip form factor but still-- and they're $600 $700 USD cheaper than this.

So what's driving Google around this? I don't quite know other than maybe the ability to get their software developers that follow Android to develop for this variation of a foldable ecosystem, which it does need variations of the application. So there is something there.

To answer your question, the consumer, what's going to drive them to buy this, I don't see anything until the use case really shows up. And I think right now what we've seen-- the buyers globally on this have been what we would consider early adopters, not what's going to drive the needle. So it's really going to need a proven use case.

And like I said, maybe Google is using this hardware as a way to get their developers to develop on that, and then ultimately it could help other Android OEMs. But it's kind of a-- you know, it's always a chicken and egg with them because you never quite understand which side is really about driving the Android ecosystem versus the Google hardware ecosystem.

- And you know, Apple not jumping into this foray just yet. Samsung sort of off to the races for now. But why do you think Apple hasn't stepped into this space yet?

RYAN REITH: Honestly, I think it's-- they understand the market right now and they understand that the demand isn't there. And this is not new. I mean, I was listening to your previous segment on AI, which was very interesting. And I think, you know, Apple's also not one that has spoken up about generative AI. They have not made a public statement about a foldable phone.

They've also, by media sort of headlines, continued to delay their AR or VR headset. And to me, I think hopefully the industry knows this. They have had and they've been testing the capabilities on everything, including foldable phones, for a while. I think that they wait till the pulse on the industry and from a demand standpoint is right, and I don't think it's right-- right now.

- And so then just quickly, market leaders in this space.

RYAN REITH: Yeah. Samsung owns 80% of this market, I think. To be precise, last year I think our data was 82% of the global foldable phone. And just to be clear, for those that look at the specifics, that's folds this way and also flips. Any type of smartphone where the screen bends, they own 80% of that market. Let's just call it that.

And from a volume standpoint, the market almost doubled last year alone. Went from 8 million units in '21 to about 14 million last year. And we assume it's going to be somewhere around 21, 22 million units this year. So yeah, from a growth standpoint, it's growing. It's coming from a zero base. And keep in mind we're talking about a market size that's 1.2 billion, so we're talking about a percentage point.

We're also talking about a time where the economy is not good, people are not willing to spend more, and it's not proven use case. So again, it's a really tough ask right now to get people to spend more on something that they don't quite know yet that they need it. Again, I'm not completely pessimistic. In the long-term I think that use cases can be proven around foldable displays. I don't think that they're there yet.

- Yeah. Plus, I'll have to see how much it costs if I drop it as well. Something that you know we're all going to do as well. A big thank you there to Ryan Reith, program vice president for IDC's mobile device tracker suite. Thanks so much.