Key Points
Apple's entrance into the foldable smartphone market should help drive sales, especially in China.
However, this is not the main reason to buy the stock.
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Apple (NASDAQ: AAPL) is no longer at the forefront of innovation, having taken on the role of waiting for competitors to pioneer new technologies before looking to perfect them for its own devices.
The company has taken the same approach with foldable phones. Foldable smartphones have been around since 2019, but Apple is just now looking to enter the market later this year.
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The company has reportedly hit a snag as it works through some technical challenges related to the device's design and durability. However, it is still expected to introduce the new device in September when it typically unveils its latest iPhone product lineup. The foldable iPhone is projected to cost more than $2,000, making the phone its new high-end version.
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While introducing a technology that has been around for seven years doesn't sound too exciting, it will be something new and different for users within the Apple ecosystem.
The company has a fiercely loyal customer base, and quite frankly, once you're in the Apple ecosystem, it's hard to get out. That is why I think the foldable iPhone could be a good seller, even though the majority of U.S. consumers have said they aren't that interested in foldable smartphones.
Is Apple stock a buy?
Apple stock is not a buy on the introduction of a foldable iPhone by itself, but that could help drive sales. These phones will come at a higher price point, so any user upgrades will help give it a sales lift. However, its most important market for these phones isn't the U.S.; it's China.
Apple has begun to see a resurgence in the country, helped by its new orange-colored iPhone. Foldable smartphones, meanwhile, are very popular in China. It's the largest market for these devices, and foldable smartphone sales have been growing briskly.
Meanwhile, any Apple device that can draw in more users to its platform is a big win. While Apple created a strong upscale smartphone and electronics brand, the beauty of its business model is that these devices help lock in customers to its ecosystem, where they then buy high-margin subscriptions and services. This can be something as simple as paying for additional cloud storage to hold photos or getting an Apple Music subscription. Meanwhile, Apple Pay is the world's largest digital wallet and has been another huge growth driver.
Overall, I think the foldable iPhone should be a nice positive for the company, but buy the stock because it has one of the world's great compounding business models, not for its latest hardware introduction.
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Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and is short shares of Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
