Editor’s Note: Mohanbir Sawhney is a professor at Kellogg School of Management at Northwestern University. The opinions expressed in this commentary are his own.
Some 25 years ago, Chrysler introduced a sportscar called the Dodge Viper. It had a monster V-10 engine, and Chrysler never sold that many of them. But the Viper holds an important lesson about innovation. The product was more about elevating the Dodge brand and giving Chrysler a veneer of “cool.” People went into showrooms to gawk at the Viper — then they bought a Chrysler minivan or a sedan.
Fast forward to today and change products. Samsung’s new Galaxy Fold, a foldable smartphone with an eye-popping price tag of nearly $2,000, is a lot like the Dodge Viper. It’s a game changer — a brand play by Samsung to burnish its image as an innovation leader.
With bragging rights to the first foldable smartphone, Samsung is taking the innovation lead over Apple. That’s why the Galaxy Fold isn’t about generating sales. In fact, it’s doubtful that Samsung really cares about selling any significant number of these smartphones that fold out into a tablet. Samsung’s strategy — and a good one, at that — is about generating buzz in the smartphone category that has had very little real innovation news until now.
No matter that the Galaxy Fold is clunky and sure to have some product glitches. For example, I predict the battery life will be limited by the Galaxy Fold’s six camera lenses, and one must wonder how much unfolding that all-too-visible hinge in the middle will be able to take. And, there isn’t anything more you can do with a 7.3-inch screen that you cannot do with the 6.4-inch screen on the Galaxy S10+. So, Galaxy Fold seems to be a solution looking for a problem.
But usefulness and value for money are the wrong yardsticks to measure the success of the Galaxy Fold. Its job is not to make money; its job is to make waves. The brand people will be talking about is Samsung. And that will probably get more Galaxy S10 and S10+ phones into consumer hands, with prices starting at $899 and $999, respectively.
The Galaxy Fold, like the Dodge Viper, is a “halo product” — a complex piece of machinery at a ridiculous price point that is not intended for the mass market. And that is the point. The appeal of the Galaxy Fold is not based on its functional appeal, but rather on its emotional appeal as the coolest toy in the smartphone business. If you want functionality or value for your money, buy a Galaxy S10+ and a tablet instead, and you will still have money to spare.
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As a first-generation product, the Galaxy Fold is gimmicky and raises the obvious question: Is it a phone or a tablet? But that’s not a bad question for a first-generation product, as we saw with early versions of the Apple Watch. For the first few generations, the Apple Watch was a solution looking for a problem — that is, until the Apple Watch 4 was unveiled. Then it became clear that it could serve as a medical device for your wrist, detecting irregular heart rhythms.
It will take several generations before Samsung gets this right. By then, the foldable phone may morph into a bendable or a scrollable phone — who knows? But right now, the Galaxy Fold is doing exactly what it’s supposed to do: make people sit up and take notice of Samsung at a time when Apple appears to have lost its innovation mojo. Even the Galaxy Fold’s sky-high price is part of the act. If Samsung had somehow found a way to make it cheaper, it wouldn’t generate the same level of excitement.
So who will buy the Galaxy Fold? Diehard Samsung fans and people who absolutely must have the latest gadget will probably spend the $2,000 to be among the first to have one. These technology enthusiasts don’t ask inconvenient questions such as, “What will you use this for?” They just want something that few others have. And that’s driving the conversation in Samsung’s direction.