Tailwinds Starting in 1Q25
November 13, 2024 - Early 2025 has several encouraging trends that should improve momentum in the US smartphone market. Verizon's 36-month financing shift ends in February, likely boosting demand from delayed 2H24 purchases. AT&T also benefits from an easier Q1 comparison after its financing shift slowed 1Q24 sales. Apple's off-cycle iPhone SE4 at ~$500 is expected in March, alongside the eagerly anticipated iOS 18.3 with Siri contextual awareness, potentially improving iPhone 16 trends. Early release of Google's Pixel 9a in March, Samsung's between-cycle Galaxy S25 Thin in Q2, and broader AI innovations could further drive upgrades. Notably, Samsung is rumored to introduce three to four meaningful new AI features in the Galaxy S25. While AI-driven demand in 2024 has been mild, we are optimistic about its potential to drive upgrades. However, our confidence in timing remains limited.
Foldables Stabilizing or Stagnating?
November 13, 2024 - Despite several iterations, foldable phones remain a niche product with limited mass market appeal. Samsung’s Z Series, which replaced the popular Note Series (notching ~2M sales through Q4 with its final Note 20 release), has seen sales drop significantly, with the latest Z6 Series trending to only ~400k units. After years of declines, the Z6 Series showed modest early growth, but sales slowed in October, and the year is on track to end with a 5% y/y decline vs the Z5 Series. Z6 trends suggest that foldable sales may have stabilized, potentially reaching a low point. The Z6s improved by addressing concerns over their ‘less than flagship’ specs but continue to face challenges due to high pricing and durability concerns. A more affordable foldable could expand the market, as Motorola demonstrated with its sub-$1,000 Razrs in 2023 and reinforced with its significantly improved Razr 2024 at ~$600. Ultimately, even with a budget-friendly option, Samsung will struggle to drive broader adoption of the foldable form factor without a compelling use case to more than offset durability concerns.
