'Galaxy Z Flip' Sold Out March... Quiet 'Galaxy S20' Amid Tight Subsidies

Sold out in over 20 countries... Cheaper and more portable than the Galaxy Fold
Foundation for foldable phone popularization... Sequel expected in the second half
Galaxy S20's early performance weak due to COVID-19 impact
Lower subsidies than previous model increase purchase cost burden

[Asia Economy Reporter Han Jinju] Samsung Electronics' second foldable phone, the 'Galaxy Z Flip,' continues its global sell-out streak. Samsung Electronics is also delighted with the hotter-than-expected response. The problem lies with the 'Galaxy S20,' which determines Samsung Electronics' performance. Due to the impact of the novel coronavirus disease (COVID-19), its initial sales results have been lackluster.

According to Samsung Electronics on the 6th, the Galaxy Z Flip was released in more than 40 countries including South Korea, the United States, China, Japan, Spain, Singapore, and the United Arab Emirates, and sold out in about 20 of those countries. The Galaxy Z Flip sold out in 9 minutes during the first sale and in 30 minutes during the second sale on a Chinese online shopping mall. Despite the domestic market being severely contracted due to COVID-19, consumers showed enthusiastic support for the Galaxy Z Flip. It also sold out within a day during the pre-sale conducted by Japanese mobile carrier KDDI. In South Korea, all first batch unlocked sales were sold out immediately after release, and the second batch sales will begin in mid-month.

Sell-out streak in major overseas countries

Thanks to its attractive design combining a more affordable price than the Galaxy Fold and portability, the Galaxy Z Flip has received favorable reviews. While the Galaxy Fold opened the curtain for foldable phones, the Galaxy Z Flip has shown the possibility of popularizing foldable phones. If the profitability of foldable smartphones improves and a system capable of mass production is established, the popularization timeline is expected to be accelerated.

Samsung Electronics' head of the wireless business division, No Tae-moon, recently explained at a press briefing, "The point at which foldable phones can be truly popularized is when we can supply the environment and quantity so that customers can buy the products they want at the time they want."

Samsung Electronics has set its foldable smartphone shipment target for this year at 4.5 to 5 million units. Although this is only 1.5% compared to the annual smartphone sales volume (300 million units), the proportion of the foldable category is expected to increase as the foldable phone lineup expands. Samsung Electronics is developing various lineups including the horizontally folding 'Galaxy Fold' and the vertically folding 'Galaxy Z Flip' successors. There are also talks of releasing the second generation Galaxy Fold in the second half of the year, followed by new derivative models and lower-priced models.

According to market research firm Counterpoint Research, the foldable phone market size this year is expected to be about 5.5 million units, roughly eight times last year's (700,000 units). It is anticipated to grow to 38.6 million units by 2023.

Galaxy S20 hampered by COVID-19

On the other hand, the pre-order sales performance of the Galaxy S20 was lower than expected. According to the telecommunications industry, pre-order sales were about 50% compared to the Galaxy S10. Including unlocked units sold directly by Samsung Electronics, it reached about 80% of the previous model. The rapid nationwide spread of COVID-19 during the pre-order period also affected sales performance.

Telecom carriers' official subsidies were capped at 240,000 KRW, increasing consumers' smartphone purchase costs. For comparison, the Galaxy Note10, released in August last year during a market boom to secure 5G smartphone subscribers, had subsidies up to 540,000 KRW. The 'gentlemen's agreement' by telecom carriers to shorten the pre-order period to one week while maintaining subsidies has backfired painfully on Samsung Electronics.

An industry insider explained, "Overall, the atmosphere is not good. Smartphones are consumer goods that can be postponed for purchase, and subsidies have also decreased."

Meanwhile, on the 6th, Samsung Electronics officially launched the Galaxy S20 in about 20 countries globally, including South Korea, the United States, Canada, Southeast Asia countries such as Singapore and Vietnam, and Puerto Rico. The release countries are expected to expand to about 130 countries by the end of this month.

This content was produced with the assistance of AI translation services.