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Samsung Puts Launch of Galaxy Fold on Hold

If you're a tech company that wants to debut a smartphone with a revolutionary new feature, the one thing you don't want your early reviewers to tell the world is that the aforementioned feature rapidly broke their devices. That's probably doubly true when it's a feature that makes anyone hearing about it for the first time think, "Wow! How the heck will they do that without the phone breaking in 10 minutes?"

So it may come as little shock that Samsung (NASDAQOTH: SSNLF) has canceled the event to unveil its foldable-screen smartphone -- the Galaxy Fold -- that was scheduled for today, and sales are postponed until the company can address its problems: Some high-profile reviewers said the flexible 7.3-inch screens were breaking at the hinge, or blacking out. In this segment from MarketFoolery, host Chris Hill and senior analyst Seth Jayson discuss the future of foldable phones, what these troubles mean for Samsung and its $2,000 device, and whether a big rival could soon do it better.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. A full transcript follows the video.

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This video was recorded on April 22, 2019.

Chris Hill: We have to start with the big tech news of the day. This requires a little bit of background. On Wednesday, Samsung was planning an event in Shanghai to unveil its new Galaxy Fold smartphone. The Fold means what you think it means. This is the foldable display phone. That was going to be on Wednesday. It was going to be on sale on Friday. Today, Samsung announced it is postponing the event. The company actually didn't say why they were postponing it. But I think for anyone who has seen the early reviews -- because of course, Samsung, like any consumer tech company, got the product out early to some tech reviewers --

Seth Jayson: To the "influencers," everyone envision my air quotes, "influencers." What we used to call tech reviewers.

Hill: Joanna Stern, for one, at The Wall Street Journal, did a very entertaining and illuminating video. The reviewers...it didn't go well. So they are postponing this event and the launch of this phone, and it seems like for really good reasons.

Jayson: It did, and it didn't. The Verge had a great long video and the reviewer said his phone broke, the screen broke on his. The scandal is that the screen is breaking, which is something, as a guy who builds things for a living, I was like, "You're going to try to make a screen fold?" You take a piece of leather, a piece of nylon webbing, and you fold it enough times, it starts to get broken.

Hill: It's going to wear out.

Jayson: I don't know how you can build a screen that won't. They must think they have. Unfortunately, there's four high-visibility reviewers whose phones broke. Two of them, as far as I know, peeled off this protective layer you're not supposed to peel off. It's an anti-scratch layer. The screen itself is plastic, not glass, I guess. And in doing so, they probably busted up the electronics underneath it, and it went bad. But others didn't peel that off, and it still went bad. There are a few of these units, a handful. But of course, on the Twitter, that equates to everything. It's a big problem because everybody's worried, especially because it's a $2,000 phone.

That said, the guy at The Verge actually said, "I really like this, even though there's a whole bunch of stuff I don't like." He said he really liked the unit anyway because...there were various reasons. It's worth going through. Casey Neistat, he's a YouTube guy, does drones and phones and stuff. He liked it, too. Looking at it, I was expecting to scoff. I'm a scoffer.

Hill: You are.

Jayson: I'm a scoffer. But I think when the tech is better, and if they can get the screens not to break, it will actually take a lot of the tablet market. People are carrying on tablets and phones because they're really two different use cases. If you can get that screen a little bit bigger, you probably don't need the tablet. Everybody said there's a visible crease, but you don't really care about that after a while. The crease isn't worn, it's just there, and it's probably always going to be there.

My prediction, Apple does a little bit better job with this in the near future, and it becomes the thing. Which would probably kill a lot of the iPad sales. But maybe tablets deserve to die. Maybe we just need phones that have foldable screens.

Hill: Yeah, it really does seem like Samsung is onto something here. They are absolutely not there yet. As you said, they're asking people to pay $2,000 for this thing.

Jayson: And it's the thickness of two phones plus a little air space when it's folded. It's a big chunk. It weighs twice as much as a phone. It is not there yet. But I think they will get there.

Hill: But to your point of what it might do to the tablet market, if you look at this and say to yourself, "Well, I was thinking about buying a new phone and a new tablet," if you're buying top of the line, that gets you somewhere in the neighborhood of $1,500, $1,700. So you can justify $2,000. But, only if it works. You really have to be confident that this is going to work.

Jayson: I think they're going to have to come out with a big splash. A big deal. Like, "We'll replace these things if they wear out." They said it was good for, I don't know how many hundred thousand openings and closings, which is only like five years at 100 openings a day. People are going to do more than that. I'm astounded that they thought they could release this. Again, as a guy who builds things like bicycles and worries about things bending a little bit over and over again and eventually breaking, it's astounding to me that you could build a flexible screen that would work at all, that you could open 10 times and it wouldn't break.

Hill: And a little bit of this, and only a little bit of this, for Samsung is a communications problem. As you said, they've got this protective layer on top that people naturally started to peel off because if you buy any other device from Samsung or Apple, they usually come with this very thin layer of plastic that's protective and you peel it off. They didn't go out of their way to tell the reviewers, "Oh, by the way, this thing that we know you're used to pulling off, don't touch it."

Jayson: It should have been clear because it was really hard to pull off. Some of the reviewers said, "I started pulling on this and then it became clear this was a no-no." But the screen itself being plastic and flexible, there are going to be people who won't like it because it is going to get dinged, and those dings are not going to go away. That's going to be something that some people will not be able to get over, especially for $2,000.

Hill: It'll be an interesting thing to watch, not just how Samsung retools this, reboots it, and eventually launches it, but also to see the response from Apple. I think you're right. If the Apple folks weren't already working on this, they probably are now.

Jayson: I think if someone gets this more reliable, thins the sides down, there's a very good use case for it in the future. And then the prices, of course, will drop like crazy. I bought a TV for $300 a month ago or something, and it's the size of my wall. I remember when those didn't exist, and then I remember when they were $2,000. Now, they're cheaper than your phone. They're cheaper than a phone at Cricket. That's what happens.

Hill: Not that we're picking on Cricket.

Jayson: No, that's what I've got. I'm a cheapskate. I think my phone costs more than my TV.

Chris Hill has no position in any of the stocks mentioned. Seth Jayson has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends AAPL and TWTR. The Motley Fool has the following options: long January 2020 $150 calls on AAPL and short January 2020 $155 calls on AAPL. 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.

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