Samsung Galaxy’s foldable-phone pitch: Just try them, you’ll like them

Consumers had initially balked at a price tag that hovered around $2,000. Durability remained a concern. During the pandemic, the device’s main draw of portability was undercut as people stayed home. Closed stores meant few buyers could see and touch a foldable phone that looks dramatically different from everything else.

That has brought an underwhelming debut to what had been one of the smartphone industry’s most-hyped products. The device has a tablet-size screen that folds in half like a book, becoming small enough to carry in a hand, pocket or purse. When closed, a second display on the outside can field most tasks.

Roh Tae-moon, president of Samsung’s mobile-communications business, said he has heard all the complaints. He is hopeful the company’s two new foldable devices, which were unveiled Wednesday, become more than fringe products in the smartphone market. As more countries reopen, more people will finally get to see the merits of foldable phones, he added.

“We’ve seen that users who have tried foldable phones like the experience and say they want to use them again,” Mr. Roh said. “But it’s hard to discover the value of foldables if they haven’t had a chance to experience them.”

One immediate shift in tactics: a lower price tag. The larger Galaxy Z Fold 3 5G will cost $1,800, or $200 less than its predecessor. The price for the more compact Galaxy Z Flip 3 5G is cut to around $1,000. Last year’s model made its debut at $1,380.

Samsung, the world’s largest smartphone maker, dominates the foldable category. Just three other companies have rival foldable phones: Huawei Technologies Co., Xiaomi Corp. and Lenovo Group Ltd.’s Motorola.

But just two million foldable phones were sold world-wide last year, or about one-quarter of initial projections before the pandemic, according to Strategy Analytics, a market researcher. Shipments of foldable phones this year are forecast to hit seven million units, it said.

That is a sliver of the 1.42 billion smartphones forecast to be shipped in 2021, according to Strategy Analytics. But foldable phones have outsize importance, both as a flashy product that might sway consumers to upgrade their devices and as a profit driver.

If it could sell 10 million foldable phones a year, Samsung would likely generate $1 billion in operating profit—a sum that would be greater than the combined earnings last year of the roughly 300 phone makers that use Google’s Android operating system, said Neil Mawston, executive director at Strategy Analytics.

“Foldables can give Samsung a huge bang for its buck,” Mr. Mawston said.

Though Apple Inc.’s iPhone has seen sales soar, the broader smartphone industry could use a breakthrough hit. World-wide shipments have declined the past three years, according to Strategy Analytics. Global phone shipments will grow 9% this year, though will be roughly the same size as in 2019, according to the company’s forecasts.

Foldable phones were more disproportionately affected by the pandemic than standard ones, industry analysts say. Given their novelty and higher price, foldable phones are products that consumers would prefer to hold in their hands before making the leap, and that became difficult during lockdowns, said Sanjeev Rana, a Seoul-based senior analyst at brokerage CLSA.

“Nobody wants to spend $2,000 looking at a phone on the internet,” Mr. Rana said.

Samsung’s mobile business has a lot riding on the foldable phones becoming a success. The Suwon, South Korea-based company doesn’t plan to release a new version of its plus-size Galaxy Note device this year. Pandemic-induced production issues in Vietnam affected output in recent months, while Covid-19 outbreaks in markets such as India sapped demand. Samsung’s second-quarter mobile profit fell 26% from the previous quarter.

Mr. Roh, 52 years old, has led Samsung’s mobile unit since early last year, after spending decades working in the company’s mobile research-and-development team. Market intelligence shows that people are using their mobile devices more than before the pandemic, he said, and using them to do more types of tasks.

“In a way,” Mr. Roh said, “This represents a second heyday of sorts for smartphones.”

The South Korean company’s foray into foldable phones in 2019 began with controversy. Tech reviewers found structural flaws, including screens that bulged. Samsung delayed the original Galaxy Fold phone by months and fortified the design.

Making the foldable phones sturdier is a selling point for Samsung’s two new releases. A protective film for the main display will improve durability by 80% compared with the previous models, the company says. The devices have gotten thinner and lighter, and come bolstered with stronger frames and hinges. Neither has an earphone jack.

The pricier Galaxy Z Fold 3 has a main display that measures 7.6 inches diagonally, with an exterior cover screen of 6.2 inches. When opened, the front-facing cameras are embedded under the display, meaning the circular lenses largely disappear when using the phone. It is compatible with the S Pen stylus, a favorite for Galaxy Note fans, though it must be purchased separately.

The more compact Galaxy Z Flip 3 has a 6.7-inch main display. The area of the exterior screen, which had previously been a thin bar, is now large enough to support four main apps and enables users to read several lines of notifications and messages without opening the device.

Preorders for Samsung’s newest foldable devices begin Wednesday in the U.S., with the phones hitting shelves Aug. 27 in several markets. To further entice buyers, Samsung is letting consumers in the U.S. trade in up to four devices, including those from other brands, for discounts that could reduce the price of the Galaxy Z Fold 3 to $1,000 or halve the price of the Galaxy Z Flip 3.

“Last year, there was a significant gap between what consumers were willing to pay and Samsung’s pricing,” said Jene Park, a senior analyst at Counterpoint Research, which tracks smartphone sales. This year, he added, Samsung’s foldable-phone pricing should be more aligned with what consumers expect.

Lee Ji-hoon, a 37-year-old office worker in Seoul, is an early adopter. Last year, he picked up a Galaxy Z Fold 2 and can’t see himself ever going back to a conventional smartphone. He is hooked on the wider screen.

But Mr. Lee acknowledges one drawback, even when the device is closed. “The phone is too bulky to fit in my pants pocket,” he said.