Apple has finally entered the foldable market with its highly anticipated device, and while analysts are largely upbeat about its commercial prospects, concerns over profitability are casting a shadow over the launch.
On Wednesday, September 9, Eastern Time, Apple unveiled its inaugural foldable iPhone, branded as the "Duo," with a starting price of $1,999. This marks a significant milestone for the tech giant as it ventures into a new form factor.
Despite the buzz, the company's shares dipped 0.28% at Wednesday's close, reflecting investor anxiety about rising costs and thinning margins within Apple's premium product lineup.
Several financial institutions have pointed to the company's pricing strategy as a potential drag on profitability. Notably, Apple chose to keep the iPhone 17 and Air series at their existing price points, while the price hikes for the Pro and Pro Max models were more modest than expected. According to Jefferies, this tactical move appears to prioritize sales volume over profit protection, a deliberate trade-off in a highly competitive market.
Strong Debut for the Foldable, With First-Year Sales Estimates Raised
Bloomberg Intelligence has praised the Duo's design, calling it "one of the most well-crafted products Apple has delivered for its smartphones in years." The research firm anticipates a more enthusiastic consumer reception compared to recent iPhone releases. In a notable revision, Bloomberg Intelligence has upgraded its first-year shipment forecast from an initial 10 to 14 million units to approximately 14 million units. At the $1,999 price point, this could translate to an impressive $28 billion in first-year revenue for the foldable device.
Market research firm Vital Knowledge also holds a favorable view of the Duo, describing it as a "highly appealing" device with competitive pricing. However, the firm has cautioned that there are lingering questions about Apple's manufacturing capacity to meet potential demand surges, a factor that could temper initial sales momentum.
Pricing Tactics Trigger Profit Margin Skepticism
Apple's latest event also saw the introduction of the iPhone 18 Pro and Pro Max, with the standard iPhone 18 conspicuously absent from the lineup, as widely rumored. This decision means the iPhone 17, which would typically see a $100 price cut or be phased out at this stage, will continue to serve as the backbone of Apple's mid-tier sales strategy for another year.
In a departure from its usual practice of quietly adjusting prices on its website post-event, Apple made no on-stage announcements about reducing older model prices. Historically, the company refrains from public price drops, instead silently updating its online store to remove older Pro models and retain the previous standard version at a discount.
Analysts have expressed varying degrees of concern regarding Apple's overall pricing architecture. Jefferies has maintained its "underperform" rating on Apple with a price target of $263.66, emphasizing that the unchanged pricing for the iPhone 17 and Air series, while likely to boost demand, could also escalate margin pressures. The analyst specifically highlighted that, in an environment of rising global supply chain costs—such as expensive 2nm/3nm wafers and surging memory prices—Apple is compelled to keep older models at stable prices to solidify its mid-range market foundation.
Vital Knowledge, on the other hand, noted that the price increase for the Pro and Pro Max models was capped at $100, which falls short of the $100 to $200 range that many had anticipated. This discrepancy, the firm suggests, might fuel profit margin concerns among investors. Nevertheless, Vital Knowledge also acknowledged that Apple's underlying strategy seems geared toward nudging its product mix toward higher-end devices, aiming to offset margin erosion through an optimized sales composition.