Folding devices – Nasty origami pt. VII

Samsung fixes everything but the elephant.

• Samsung is expected to release two new folding phones in July where it has made substantial improvements to durability except the one that really matters meaning that this segment will remain niche and that Apple will hold off from going down this route.
• A sift through Samsung’s trademark documentation and leaks reveals that the key focus of the Galaxy Fold 3 and the Galaxy Flip 3 will be on durability.
• These launches are expected sometime in July 2021 where the water and dust resistance will be key as will be protective cases.
• These are both important steps forward but the only one that really matters is the coating that is placed above the internal OLED screen which folds.
• The problem here is a very simple one.
• Materials that are scratch-resistant also tend not to bend very well and no amount of marketing can disguise this when reviewers get their hands on the device (see here).
• As a result, Samsung’s much-touted Ultra-Thin Glass (UTG) layer turned out to offer no real protection against scratching meaning that shortcomings of the folding screen were pretty much the same as the Galaxy Fold 1.
• This is because the glass component is actually underneath the top plastic layer which in my opinion renders the use of glass in this product pretty much useless.
• It may make the screen more resistant to abuse by a sharp object puncturing the plastic layer but most destructive tear-downs seemed to indicate that this protection was minimal at best.
• The UTG is widely expected to be more durable this time around but while it remains under a plastic screen layer, it will offer no improvement in protection against scratching.
• In order for this sector to take off and indeed for Apple to adopt the folding form-factor, I think that this problem needs to be comprehensively solved.
• This is a very difficult problem to solve and from what I have seen so far, I think the more durable UTG in the Galaxy Fold 3 and the Flip 3 will be more about marketing than about making the folding screen more durable.
• Improvement to water and dust resistance will be welcome improvements but until the smartphone makers can deal with the elephant in the room, this sector will remain a cool oddity.
• Apple does not really do cool oddities preferring to instead ship hundreds of millions of relatively bomb-proof handheld computers that can also make calls.
• This is why I don’t see Apple adopting this segment anytime soon meaning that there is no reason to get excited yet.
• I think that this is still the leading contender to trigger another replacement super-cycle but that day remains quite some way off.
• Hence, the smartphone market will continue to be driven by pandemic-related factors such as economic re-opening and so on.
• All of this remains comfortably priced in and so I still do not see any interesting opportunities for investors at this point in time.