John Ternus’s first test at Apple: selling a $2,000 foldable iPhone

Apple’s John Ternus is set to unveil his first slate of new products as chief executive on Wednesday, hoping to sell customers on two things not seen in the iPhone’s two-decade history: a foldable screen and a price tag above $2,000.

The new design has been in the works for at least eight years inside the company’s hardware division, until this week led by Ternus. Outgoing chief executive Tim Cook has handed his successor the opportunity to front the high-stakes launch in his second week atop the world’s second most valuable company.

But the launch brings big challenges as Apple needs customers to swallow price increases to make up for cost pressures across its supply chain or take a hit to its high margins. And foldable phones, while eye-catching, have had limited traction with consumers in the seven years since other major manufacturers brought them to market.

“There are a lot of reasons Apple wanted to wait in that particular product category,” said Radu Reit, a former Apple display engineer. Recent advances have improved the durability of the foldable screen while minimising the crease and lowering manufacturing costs.

“The structure of the device Apple will probably launch has been possible for more than a decade. However, that screen would have cost thousands of dollars to make 10 years ago,” Reit added. “The other aspect is commercial: Is the market really big enough? It wasn’t the case at the time.”

Apple’s foldable device is expected to cost $2,000 or more alongside price rises across the iPhone range, according to analysts, a milestone that could test customers’ tolerance. The company is expected to stagger the launch of the base model iPhone 18 into spring of next year.

Foldable devices make up about 2 per cent of global smartphone sales. And the growth of this segment has slowed markedly since Huawei and Samsung launched their first products in 2019.

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Samsung in particular suffered early technical issues, with screens that began to bubble and ripple, leading to high return rates. Huawei delayed its own launch in 2019 as a result.

Apple is betting its device can revive interest in a relatively niche design and help the company capture market share.

It shows the iPhone maker adopting a familiar strategy: watch competitors launch a risky new device first and suffer any consequences from early snags before launching a refined version of the same idea.

Apple’s work on foldables began before Cook was chief executive. A 2011 patent shows the company developing a hinge mechanism, and engineering and display teams were experimenting with foldable technology as far back as 2018, according to people familiar with the matter.

Edison Lee, analyst at Jefferies, said Ternus’s appearance on Wednesday will mark the start of a three-to-five-year cycle of new product launches planned long before he took the job, aimed at reviving consumer interest.

“Demand for the iPhone is saturated, and they need to focus on new form factors to drive smartphone replacement . . . they cannot just sit with the current form factor and hope that people will be willing to pay more over time,” Lee said.

Apple, along with the rest of the consumer electronics industry, has been hit by component shortages this year as data centres hoover up parts, particularly memory chips. The company has since raised prices for Macs and iPads.

Global smartphone sales are shrinking as prices rise, according to estimates from the International Data Corporation. Apple diving in will make foldables the only segment of the market to grow in 2026, IDC projects.

Analysts at IDC expect about 12 per cent year-on-year growth in global foldable sales, with Apple capturing a 40 per cent share of that market by 2027.

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David Vogt, analyst at UBS, said he expects Apple to sell at least 10mn foldables in the first year, about the same number Samsung sold in the past 12 months.

Those sales will be a small slice of the roughly 250mn iPhones Apple ships globally but significant enough to help it lift the average price of the device. “If you are going to face a supply chain challenge, you build more of the expensive devices and fewer of the cheaper ones,” Vogt said.

Vogt, like many analysts, expects Apple this week to introduce price increases across the board for the iPhone. This will probably be watched just as closely as any shiny new device.

“I’m worried,” he said. “The last time Apple aggressively raised prices on the iPhone was post-Covid in Europe and sales almost immediately fell.”

The foldable appears set to perform best in China, where Huawei has had some success and where Apple has been regaining smartphone market share.